Any reasonable and savvy investor will tell you to never put all your eggs in one basket. To have yourself ready for any market turbulence, it is necessary to diversify your portfolio and put your cash into different assets rather than, let’s say, only stocks. For that, commodities often serve as an excellent investment vehicle for many people.
However, similar to other financial markets, commodities have been affected significantly by the coronavirus outbreak. For that, finding the top commodities to invest in 2020 becomes a tough task for today’s investors.
To make it easier for you, in this article, we review some of the best options to consider in April.
The latest commodity market overview
The commodity market has been experiencing turbulent times since the start of the year. The first and major trend is the decline in crude oil prices. At the beginning of 2020, WTI oil was trading at $61 per barrel. However, it has since plunged dramatically, with its price currently standing at the $26 mark.
The drastic fall in oil prices was mainly a result of the price war between Saudi Arabia and Russia. Earlier in March, Saudi Arabia slashed its oil export price to $30 per barrel. This decision has sent Brent and WTI oil into freefall, and both have been on a downwards spiral ever since.
The prices of other primary commodities such as silver and platinum have also been negatively affected by the deadly pandemic. Silver, which was worth $18 per ounce at the start of the year, is now trading at $14 per ounce. Platinum is also down from $1,022 per ounce to $714 per ounce.
While gold dipped steely in March, it has bounced back to trade at its January 2020 levels of $1,590 per ounce. This is because more investors now look at this shiny precious metal as a safe haven while equities and cryptocurrencies continue to disappoint with their poor performance.
Top commodities to invest in April
Watching the rising economic uncertainty, international investors are now wondering: “what are good commodities to invest in April?” For that, we take a look at some of the top commodities you can invest in at the moment.
Gold could perhaps be the best commodity you can invest in at the moment. For centuries, it has played a safe-haven role in the global economy which is now needed more than ever.
During times of crisis, investors have always looked to assets with high intrinsic value to safeguard their portfolio and ensure they do not lose wealth to a market crash or recession. The prices of these safe-haven assets usually surge during the downturn period.
For that, gold is predicted to appreciate in value over the coming months. Thus, making it one of the best commodities to invest in April 2020.
At the start of 2020, gold was trading at $1,552 per ounce. However, the price is now steadily rising following last month’s dip and is currently trading close to the $1,600 mark. Analysts believe it could go for a new high and break past the $2,000 milestone this year.
Crude oil making it to the list of the best commodities to trade in April 2020 could come as a surprise due to its currently low valuations. However, as an investor, the first rule is to buy low.
It is highly unlikely that the price war between Russia and Saudi Arabia will last for ever. By the time the two giant oil economies amend their differences, there would be room for improvement, and oil prices could surge once again.
Trade Brent Crude Oil Spot CFD
Remember that crude oil is refined into products such as gasoline, plastics, medicines, ink, cosmetics, fertilisers, asphalt, and more. Thus, the demand for this commodity will always exist.
Once the coronavirus pandemic, which is forcing millions of people around the world to stay at home, is over, usage of oil will likely soar, boosting its prices to set new record highs.
If you are looking for another exciting commodity to buy at the moment, then copper has a right to be on your list. The decline in the global manufacturing sector due to the Covid-19 spread has seen the demand and, subsequently, the price of the metal plunge in recent months.
At the beginning of 2020, copper was trading at $2.83 and has been on a downward spiral ever since. It currently trades just above the $2.1 mark.
Copper is a highly versatile commodity used for wiring, motors and construction. For that, we expect the metal’s demand and price to increase after the pandemic is over and countries start making up for the industrial damage done by the disease.
Platinum is another commodity that has been severely affected by the coronavirus outbreak. The metal was trading at $981 per ounce at the start of 2020, but it is now down to $714. The decline comes as electrical factories around the world that mostly use platinum are currently shut down.
It is highly likely that demand for the metal could increase after the pandemic, and its value could recover and reach the $1,000 mark. Hence, at its current price, platinum may be presenting savvy investors with a great buying opportunity.
One of the best investment vehicles since the 2008 financial crisis has proven to be palladium. This metal is very rare and boasts various usage applications. Moreover, this lucrative metal is a relatively safe commodity as it is mainly unaffected by politics or inflation, making it a great asset for many investors.
The value of palladium has been rising steadily over the years, and some analysts believe it could surge even higher in 2020. It was trading at $1,954 at the beginning of 2020 and has gone up to hit $2,233 a few days ago.
Short-term forecast for commodity market
Most analysts are bearish on the short-term outlook for the majority of the commodities. Crude oil prices, for instance, are looking less than optimistic in the short-term. Analysts see crude oil prices dropping below the $20 mark over the coming weeks and months. It could likely be trading at $18 by the end of 2020, which means prices are not likely to recover in the foreseeable future.
Platinum and copper are also looking bearish, as investors expect them to record further losses over the next two quarters.
Meanwhile, gold has a bullish forecast as Wallet Investors see it rising by 2 per cent and 5 per cent over the next three and six months, respectively. Things are also looking great for palladium, which could rise by 2 per cent and 7 per cent in the coming three and six months, respectively.
However, as the financial markets have experienced multiple ups and downs during the past few weeks, we recommend you to arm yourself with as much knowledge as possible. When choosing what commodities to invest in, consider the latest news, market trends, expert opinion and technical analysis.
If you think you are not ready to make long-term investment commitments, but still want to try to profit from the market’s volatility, you can do so through contracts for difference (CFD).
You can learn more about CFD trading with free online courses and find out how to trade commodities CFDs by reading our comprehensive guide. Always stay on top of the latest market news with Capital.com.