Commodity prices skyrocket as Powell signals Fed pivot – What’s next? [Video]

Commodity prices skyrocketed across the board with everything from the metals to energies notching up impressive gains after Fed Chairman Jerome Powell signalled that the world’s most powerful central bank would slow the pace of rate hikes this month.

In a speech to the Brookings Institution on Wednesday, Jerome Powell cemented expectations that the Federal Reserve will step down from its aggressive pace of tightening at its upcoming policy meeting on December 13-14.

Throughout this quarter, traders have been closely watching every Fed speech, comment and statement for clues that the central bank might slow or even pause its historically-high pace of rate hikes – the much-talked-about “Pivot”.

After months of elusiveness and mixed messages, Jerome Powell finally gifted traders the answer they were seeking in his last public appearance before the central bank enters a blackout period ahead of its final FOMC Monetary Policy Meeting of 2022.

The Fed’s actions – the most aggressive since the 1980s – have lifted the target range of their benchmark rate to 3.75% to 4% from nearly zero in March. Powell's comments hardened bets that the central bank will downshift to a 50 basis-point rate increase this month – finally ending a run of four straight 75 basis-point hikes.

The commodity markets immediately reacted to Powell's speech with everything from the metals, energies to agriculture surging to multi-month highs – notching up spectacular weekly gains of 10% or higher.

And this is not the first time.

This year, we have seen a number of Commodities tallying up impressive double-digit weekly gains – not once, not twice, but on multiple occasions – and that’s one of the most lucrative trends of the current financial climate that we find ourselves in right now.

Whichever way you look at it, one thing is clear. This is the start of a more different and dovish narrative from the Fed, which ultimately presents an extremely bullish backdrop for commodity prices ahead!

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions: