Movers & Shakers: Crude oil, gold to regain appeal in 2018

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Global oil prices recovered some of the losses sustained over the second half of this year as a result of an OPEC production-cut deal, but gold prices have continued to slip.

The global commodity market is expected to enjoy one of the best years in a long time in 2018 as the world economy proceeds on the road to recovery. Credit Suisse recently revised up its projections for Brent crude to 60 US dollars per barrel, up from a bottom of lower than 30 dollars at the beginning of the year, and US WTI crude to 56 dollars per barrel.

The changes are a vote of confidence for OPEC's efforts to cut its output. Major producers including a non-OPEC group led by Russia, have agreed to extend the supply cuts to the end of next year. Analysts say that the high possibility of production cuts in Nigeria and Venezuela, coupled with a diplomatic spat in the Mideast, is likely to further push up oil prices in 2018.

Gold, however, was under significant downward pressure throughout most of 2017. That came because of major central banks, including the fed and the European central bank, executing tighter monetary policies buttressing a stronger dollar.

An improving job market performance in the US and pending tax cuts have also squeezed gold prices.

Analysts say the safe-haven asset gold will regain its appeal, as inflation climbs and geopolitical risks grow. Merrill Lynch estimates that the prices of gold will rise five percent to over 13-hundred US dollars per ounce in 2018.

Prices of energy commodities, such as gas and coal, are expected to stabilize after seeing record growth this year. But prices of iron ore are expected to slump by as much as 10 percent as global demand wanes.

(Nawied Jabarkhyl also contributed to the story.)