| After enjoying a historical bull run, commodity prices have cooled down in the past year and are likely to be in a subdued territory for some years, according to a Deutsche Bank report. What drove the cycle? Strong demand from emerging markets, especially China and India. Liquidity fuelled by policy response to mitigate the global financial crisis. Rush towards gold as inflation hedge and a safe haven. Geopolitical concerns about stability of oil supply.
What's driving the correction? Slowing down of the Chinese economy. Using commodities as an inflation hedge has lost its attractiveness as a strategy. Global policy risks have abated. Commodity demand projections are muted...............................................Full Article: Source
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