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Commodity Prices Reach Rally Inflection Point

By Chris KimbleCommoditiesApr 19, 2021 11:19AM ET
www.investing.com/analysis/commodity-prices-reach-rally-inflection-point-200573921
Commodity Prices Reach Rally Inflection Point
By Chris Kimble   |  Apr 19, 2021 11:19AM ET
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Long-Term Thomson Reuters Core Commodity Index Chart.
Long-Term Thomson Reuters Core Commodity Index Chart.

Commodities have been the talk of the town over the past several months, with grains, energy and metals reaching new multi-month highs over the 12 months.

And this has lead to concerns over input costs – and inflation.

That’s where today’s chart comes into play. It is a 25+ year “quarterly” chart of the Thomson Reuters Core Commodity Index.

As you can see, commodities have been in a broad downtrend channel since peaking in 2007-2008. As well, the 25-year stretch has produced an important support/resistance pivot line (marked by red and green arrows).

So why does this matter to the commodity index and several select commodities showing strength?

Because the current five-quarter rally in commodities is testing this important pivot (now resistance). And at the same time, it is testing the top of its 13-year falling price channel at (1).

If resistance holds, inflation may be held in check and bonds may experience a bear market rally. But if commodities breakout, then inflation concerns will continue to rise, and select commodities showing relative strength will continue higher. Stay tuned.

Commodity Prices Reach Rally Inflection Point
 

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Commodity Prices Reach Rally Inflection Point

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Comments (2)
Steve Siew
Steve Siew Apr 19, 2021 9:34PM ET
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Deflationary spiral - no inflation
Mehmet Dutlu
Mehmet Dutlu Apr 19, 2021 12:23PM ET
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The two resistance lines, one coming from 90s, are unlikely to break by commodities, since inflation concerns are also easing.
 
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