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Key points in this update:

• A nervous sense of calm has returned to global financial markets as the White House adopts a more conciliatory tone on trade.
• The risk of empty US supermarket shelves as shipments out of China for major retailers and manufacturers have slumped has strengthened calls for a deal.
• A 35% slump in natural gas to a five-month low looks overdone, while crude's rebound has stalled on OPEC supply and global demand worries.
• Gold's underlying support remains after blowout top sparks volatility and caution.
• The agriculture sector sees broad April gains supported by US dollar weakness and trade hopes.

A renewed albeit nervous sense of calm has returned to global financial markets as the White House adopts a more conciliatory tone on trade, boosting optimism that the U.S. may secure deals with key trading partners. However, China remains a critical sticking point. Beijing has downplayed progress in its trade dispute with Washington, even as steep tariffs threaten both economies. U.S. retail giants like Walmart, Target, and Home Depot have warned that the 145% tariffs on Chinese goods, coupled with a 10% import fee on nearly all other countries, could trigger major supply chain disruptions and empty store shelves within weeks.

Their warnings align with forecasts from the Port of Los Angeles, where incoming shipments are expected to drop by up to 35%, as “essentially all shipments out of China for major retailers and manufacturers have ceased,” according to the port’s Executive Director. Maritime consultancy Drewry forecasts that global container port volumes will decline for only the third time since 1979. If two-thirds of current U.S. tariffs remain, imports from China could fall 40%, partially offset by increased imports from other nations.

Despite these red flags, markets—shaken by Trump’s tariff turbulence—have stabilized. U.S. stocks posted strong post-Easter gains, bond market activity has steadied, and the dollar’s recent slump has paused.

In commodities, easing tensions have dimmed gold’s safe-haven appeal—though not before it hit our raised forecast of $3,500—allowing minor metals like silver and platinum to gain ground, for now primarily on a relative basis. Copper saw renewed interest on the COMEX-traded High Grade contract, with traders pushing its premium over London prices back up towards 15% after it had dropped to 5% during the market panic following Trump’s “Liberation Day” tariff announcement.

The performance table below which shows the total return performance of the 24 major commodity futures included in the Bloomberg Commodity Index, highlights what a troubled and volatile month April, especially the first half has been. Overall resulting in a month-to-date loss of the BCOM index of 3.3% with heavy losses across the energy sector, primarily due to a near 24% drop in natural gas, and industrial metals being partly offset by gains in gold and across the agricultural sector.

Despite the recent setback the BCOM index, which is tracked by several exchange-traded funds around the world, trades up around 5% year-to-date, highlighting its value as a portfolio diversifier and also how current macro-economic concerns weighing on pro-cyclical sectors being offset among others by haven demand, long-term inflation concerns, a weaker dollar, and climate change.

Crude oil: Rebound stalls near USD 69 Brent

Crude oil’s strong rebound from a four-year low shows signs of running out of steam, with Brent crude finding strong resistance near USD 69 per barrel. Traders now view further gains as unlikely in the short term due to the continued trade war among top global consumers and speculation that OPEC+ may accelerate production hikes from June. Frustration is mounting over non-compliance, particularly from Kazakhstan, which struggles to balance national interests with its OPEC commitments—though its membership remains secure for now.

Gold: Record high sparks volatility and caution

The spotlight in the commodities market remains firmly on gold, which this week surged to a new all-time high of USD 3,500—marking an impressive 33% year-to-date gain—before suffering an equally violent 8% correction. This rapid ascent means the yellow metal has already reached our recently upgraded price forecast far earlier than anticipated, but it also increasingly raises questions about the yellow metal's ability to continue higher without, at a minimum, going through another period of consolidation.

Gold’s meteoric rise underscores a broader trend in the commodities space, which continues to be heavily influenced by macroeconomic and geopolitical developments—particularly the intensifying trade war between the United States and China. As the world’s two largest economies clash, concerns mount over its potential drag on global growth and risk of rising inflation. In addition, the weaker US dollar, de-dollarisation from several central banks, and concerns about the fiscal debt situation in the US have also been key components behind the year-long gold rally.

In the coming days, it will be important to monitor the response from traders and investors in Asia—a key and consistent source of demand in recent months. While the short-term outlook for gold has become more challenging—particularly if the US President adopts a less aggressive tone—some nervous calm could return to markets as we await greater clarity on the impact of tariffs on economic growth and inflation. We continue to maintain a positive long-term view on gold. However, having reached our USD 3,500 target, further upside beyond may require a worsening of economic or political conditions.

Agriculture: Broad gains on weak dollar and trade hopes

The agriculture sector, which has a 36.1% weight in the BCOM Index, trades up this month with broad gains seen across all three subsectors of grains, softs, and livestock. Its lower correlation to economic growth has instead allowed the sector to benefit from the weaker dollar, and countries offering to increase their purchases of US-grown crops such as soybeans and corn. In addition, traders are also keeping an eye on US-China relations following comments earlier this week by US officials on a possible de-escalation in the trade standoff.

In softs, cotton traded back above its 200-DMA, currently at USD 0.685, for the first time in a year, as it continues to recover after hitting a five-year low earlier this month at USD 0.6080/lb. Supported by China tariff hopes, US-India tariffs talk, and short covering from hedge funds that held a record 80k lot short last month, reduced to 42k on 15 April.

Just like cotton, the Arabica coffee future has also witnessed a strong recovery from an early April slump, supported by US tariffs targeting coffee-growing countries, and the beginning of the Brazilian harvest, which is expected to be down on last year following a troubled weather-related growing season after dry weather significantly hurt flowering in key Arabica growing areas.

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