US Dollar Index since 2011
The US dollar has risen since July, creating a depressing effect on commodities, which in turn is leading to lower metal prices.
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This month, the US dollar is just “chilling” at its highest levels in 4 years.
US Dollar Index since 2011. Created by MetalMiner via Stockcharts.com.
This strong rally is not letting commodities breathe. The CRB commodity index recently marked a 4-year low, as we warned last month, confirming that commodities continue to be bearish.
CRB Index since 2011
This keeps putting pressure on base metal prices, none of which were able to rally in the second half of the year. This picture, however, could certainly change if the US Dollar sees a ceiling and commodities find a bottom. So far, however, the dollar seems to be winning the battle.
What This Means For Metal Buyers
Based on the current picture, 2015 doesn’t look promising for commodities. This is not good for metal prices overall. We’ll have to wait and see if commodities are able to bounce back during the next few months. The long-term trend is still down.
At least things are clear, the only remaining question is what does push the dollar up?
Is it the weakness of the euro or the general downturn of the world economy? Is it China’s fault?