The first quarter of 2022 was a fast-paced, dynamic period for commodities. With Russia – a major producer of several important commodities – invading Ukraine during the quarter, there was a lot of volatility across the asset class, and we saw some wild moves to the upside on the back of supply concerns. Overall, commodities was the best-performing asset class for the period, with the S&P GSCI Index – a widely-recognised commodity benchmark – rising nearly 30%.

Explosive price movements in 2022 

Oil, which is the most actively-traded commodity, registered strong gains in Q1. Its price had already been trending up towards $100 per barrel before the Russia-Ukraine crisis due to global supply and demand imbalances. However, when the crisis escalated and it came to light that Western countries were discussing an embargo on Russian oil, fears over a supply shortage resulted in its price shooting up above $125 – its highest level since 2008. Natural gas prices also rose significantly due to concerns over supply, as Russia is a major supplier of gas to Europe.

In the precious metals space, gold, which is viewed as a ‘safe-haven’ asset, spiked up above $2,000 per ounce in early March due to the high level of uncertainty associated with the Russia-Ukraine conflict before pulling back later in the month. Silver followed a similar pattern, rising to near $27, before giving up some of its gains. Platinum, which has many industrial applications, enjoyed strength up until early March, before a sharp fall when the World Platinum Investment Council (WPIC) said that it forecast another large surplus of the metal this year.

As for the base metals, we saw some very explosive price movements from nickel –  which is a key component in electric vehicle (EV) batteries – during the period. Here, sanctions being implemented against Russia raised concerns over global supply, leading to a massive short squeeze, and new all-time highs for the commodity. This resulted in the London Metal Exchange (LME) suspending all trading of nickel. Meanwhile, copper and aluminum also hit new all-time highs amid supply concerns.

Where do commodity prices go from here? 

As for where commodity prices go from here, much will depend on the Russia-Ukraine crisis. If it continues, commodity prices could keep rising as supply tightens. However, if the conflict subsides, prices may come down.

The war between Russia and Ukraine is not the only issue for traders to consider though. Covid-19 disruption in China, lower global growth, rising interest rates, and the strength of the US dollar are some other factors that could have an impact on the asset class in the near term.

Irrespective of what happens on the economic or geo-political front, there are likely to be plenty of opportunities for traders and investors in the commodities space in the months ahead. With that in mind, here’s a look at five commodities to watch in the second quarter of 2022.



Past performance is not an indication of future results.

  • Oil prices have pulled back from their March highs recently. Yet prices remain much higher than they were 12 months ago.
  • Looking ahead, many experts expect oil prices to stay high due to the supply deficit caused by Western sanctions against Russia.
  • The US Energy Information Administration (EIA), for example, expects WTI oil to average $112 per barrel for the second quarter of 2022.
  • Meanwhile, analysts at Morgan Stanley recently revised their Brent oil price forecast for the second half of 2022 up to $130 per barrel due to supply issues. They now anticipate oil production from Russia to drop by two million barrels this year, up from a previous forecast of one million barrels.
  • Recently, US President Joe Biden announced a release of one million barrels of crude oil per day for six months from the US Strategic Petroleum Reserve (SPR). This is the largest release from the SPR ever. However, analysts at Barclays believe this release will not have a lasting impact on oil prices.
  • One factor that could have a negative impact on oil prices though is new Covid-19 lockdowns in China. The International Energy Agency (IEA) believes these lockdowns will reduce global demand, which will offset the impact of lower supply from Russia.
  • Those bullish on oil may wish to consider oil stocks such as Exxon-Mobil, Shell, and Chevron, oil ETFs such as the SPDR S&P Oil & Gas Exploration & Production ETF, or eToro’s OilWorldWide Smart Portfolio, alongside CFD positions in oil.

Natural Gas

Natural Gas

Past performance is not an indication of future results.

  • Natural gas prices have had a strong run recently on the back of supply concerns. With Europe typically getting about 40% of its gas from Russia, there are fears over a major shortage.
  • Recently, gas prices have climbed after Russia stopped exports to Poland and Bulgaria due to the fact that the two countries refused to pay for gas in rubles. Countries have traditionally paid for Russian gas in dollars or euros, however, Russian President Vladimir Putin has demanded that countries now pay for gas in Russian currency.
  • On its own, this move is unlikely to have a major impact on European gas supplies. However, investors fear Russia’s actions could extend to larger European countries such as Germany and Italy. If this was to happen, gas prices could sky-rocket higher.
  • Europe has announced a plan to dramatically reduce its reliance on Russian natural gas by the end of 2022. The plan involves finding alternative supplies of gas in the near term and boosting energy efficiency, while focusing more on renewable energy in the medium to longer term. This could potentially have an impact on gas prices, however, most experts agree that the plan is very ambitious and will come with plenty of challenges.
  • Those bullish on natural gas prices may wish to consider gas stocks such as Antero Midstream Corporation, Cabot Oil & Gas Corporation, and EQT Corporation alongside CFD positions in natural gas.



Past performance is not an indication of future results.

  • After spiking in early March, gold prices have retreated recently.
  • Looking ahead, there are several factors that could potentially boost the price of gold. One is economic uncertainty. When uncertainty is high, as it is now, gold tends to perform well because it’s viewed as a defensive, ‘safe-haven’ asset. It’s worth noting that analysts at Goldman Sachs believe gold could hit $2,500 per ounce this year, as central bank and investor demand picks up on the back of geopolitical uncertainty.
  • Another factor that could drive gold higher is inflation. Gold is often viewed as a hedge against inflation as it has historically performed well when there have been concerns over high levels of inflation. In March, inflation in the US hit 8.5% – its highest level since 1981. Many economists expect inflation to remain high throughout 2022. This could have implications for gold prices.
  • However, rising interest rates could have a negative impact on the price of gold. Generally speaking, gold prices and interest rates have an inverse relationship, meaning that gold tends to fall when interest rates are rising. This is due to the fact that as rates rise, investors can pick up more interest on savings and bonds, and the opportunity cost of holding gold (which pays no interest) rises. The US Federal Reserve is expected to increase interest rates a number of times between now and the end of the year and currently, Fed funds futures are pricing in a year-end interest rate of 3.0%, which is equivalent to ten 0.25% interest rate increases from here.
  • Gold also tends to have a negative relationship with the US dollar. Recently, the US Dollar Index (DXY) has hit 20-year highs, putting pressure on gold. If the dollar continues to rise, gold could underperform.
  • Those bullish on gold may wish to consider gold stocks such as Newmont Mining Corporation and Barrick Gold, ETFs such as the SPDR Gold and the VanEck Vectors Gold Miners ETF, or eToro’s GoldWorldWide Smart Portfolio, alongside CFD positions in gold.



Past performance is not an indication of future results.

5-year performance: 189%

  • Wheat prices have climbed significantly since the start of the Russia-Ukraine crisis. This is due to the fact that Russia and Ukraine account for nearly 30% of global wheat exports.
  • Looking ahead, prices could remain high due to supply shortages. With Russia facing sanctions from the West, exports from the country are likely to fall in the near term. Meanwhile, a lot of Ukraine’s wheat may not make it out of the country this year as ports and shipping routes have been closed down. The Food and Agriculture Organization (FAO) also estimates that one third of Ukraine’s crops and agricultural land may not be harvested or cultivated in 2022 due to the conflict.
  • Overall, the US Department of Agriculture (USDA) projects that Russian and Ukrainian wheat exports will fall by at least seven million metric tons this year.
  • However, with wheat prices so high, other countries are now stepping up to fill the gap left by Russia and Ukraine. India, for example, which has historically kept its huge wheat harvests at home, is jumping into the export market, hawking record amounts across Asia. Traders believe Indian wheat exports could hit 12 million tons in the 2022-23 season, up from a record 8.5 million tons in 2021-2022.
  • Similarly, Brazil, which has historically been a net wheat importer, is also ramping up its exports. Its exports of wheat in the first three months of 2022 surpassed its exports for the whole of last year.
  • Whether this will be enough to resolve supply issues remains to be seen. If the Russia-Ukraine conflict stretches into the summer, when wheat exports from the Black Sea usually accelerate, supply could become a problem.



Past performance is not an indication of future results.

5-year performance: 158%

  • In March, palladium hit a record high of $3,441 per ounce amid fears of Russia-Ukraine-related supply chain disruptions. Russia accounts for 40% of global production of palladium and many investors expected it to hold back supplies as Western governments hit the country with harsh economic sanctions.
  • While palladium prices have retreated recently, we could still see a major supply shortage in 2022, particularly if semiconductor shortages ease and car manufacturing picks up, as palladium is used to make catalytic converters for gasoline-powered vehicles. During the chip shortage, many major manufacturers such as Ford and General Motors have been forced to scale back vehicle production.
  • It’s worth noting that palladium was in a deficit long before the Russia-Ukraine situation reached crisis level. According to specialty chemicals company Johnson Matthey, in 2021, the market deficit was 829,000 troy ounces, up from 728,000 troy ounces in 2020.
  • One factor that could have a negative impact on palladium prices is a slowdown in China. It’s among the largest consumers of the commodity, accounting for around 30% of global consumption in 2020.
  • The shift to pure electric vehicles could also have a negative impact on the commodity. That’s because EVs do not need palladium as they don’t have catalytic converters.
  • Those bullish on palladium may wish to consider palladium stocks such as Sibanye Stillwater Ltd or ETFs such as the Abrdn Palladium ETF Trust alongside CFD positions in palladium.

Charts sourced from eToro platform 03/05/2022.














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