The World Bank stated that global commodity prices have stabilized after the sharp decline last year; He predicted that the average price of gold could reach a record in 2024 before experiencing a slight decline in 2025.
The World Bank published the April 2024 issue of the “Commodity Markets Outlook” report. The report stated that global commodity prices decreased by approximately 40 percent between mid-2022 and mid-2023, and this played a decisive role in reducing general inflation last year.
It was stated that the World Bank’s commodity price index has remained essentially unchanged since mid-2023, and it was informed that global commodity prices are predicted to decline by 3 percent this year and 4 percent in 2025, assuming there will be no further flare-up in geopolitical tensions.
The report emphasized that this pace would have little effect on suppressing inflation, which remains above central bank targets in most countries, and that it may become difficult to reduce interest rates quickly.
It was stated that persistently high geopolitical tensions in the last 2 years supported the prices of oil and many other critical commodities, and if there are no supply disruptions caused by conflicts, the barrel price of Brent oil is estimated to be 84 dollars on average this year and 79 dollars next year.
The report points out that if the conflict in the Middle East escalates further, disruptions in oil supply may increase global inflation, and evaluates that a moderate supply disruption may increase the price to 92 dollars, while a more serious disruption may raise the price of Brent oil to over 100 dollars, causing global inflation to increase by almost 1 point. was found.
Geopolitical challenges expected to support gold prices
The report stated that the average price of gold, which is the popular choice of investors looking for a “safe haven”, is expected to reach a record in 2024 before experiencing a slight decline in 2025. Strong demand from developing country central banks as well as increasing geopolitical challenges are expected to support gold prices throughout this year. was expressed.
The report stated that the escalation of conflicts in the Middle East could also increase the prices of natural gas, fertilizer and food.
The report pointed out that the acceleration of investments in green technologies increased the prices of basic metals, which are critical for the global transition to clean energy, and stated that copper prices are expected to increase by 5 percent and aluminum prices by 2 percent in 2024.
“Global inflation remains invincible”
World Bank Group Chief Economist Indermit Gill, whose evaluations were included in the bank’s statement regarding the report, stated that global inflation remains invincible and said, “The decline in commodity prices, which is the main force in reducing inflation, has actually hit the wall. This means that interest rates may remain higher than currently expected this year and next year.” “It’s coming.” he said.
Pointing out that the world is going through a sensitive period, Gill pointed out that a major energy shock could undermine much of the progress made in reducing inflation in the last 2 years.
World Bank Group Deputy Chief Economist Ayhan Köse also noted that central banks should be careful about the inflationary effects of sudden increases in commodity prices amid increasing geopolitical tensions.
