Why have commodities had a challenging year in 2023?

The United States has become the world’s largest exporter of liquefied natural gas for the first time ever, surpassing top suppliers Australia and Qatar. This surge in LNG exports is driven by Freeport LNG’s return to full service and robust global demand, particularly from Europe.

With an average of 13.25 million barrels per day in October, the US continues to be the world’s largest oil producer. But commodities had a difficult year, ending down 12.55% as a result of things like growing interest rates, concerns about a recession, and China’s poor epidemic reopening.

Due in major part to record-high output, natural gas prices fell by around 44% in 2018, marking the worst year in at least ten years, as a result of excess supply.

In 2023, lithium prices plummeted due to reports suggesting that Americans’ desire for electric vehicles would be diminishing. Due to the increased need for these commodities as the world’s population grows, the lower price created an appealing purchasing opportunity.

The most popular commodity was gold, which increased 13.10% to conclude the year at a price above $2,000 an ounce for the first time. Gold has now increased in 20 of the last 24 years, or 83% of the time this century, with an average price of $1,943 in 2023.

The US central bank’s tendency to start reducing interest rates would probably give gold’s investment argument a new push. Moreover, in the first nine months of 2023, financial institutions bought a net 800 metric tonnes of gold from central banks, setting a record for gold purchases.

In the first nine months of 2023, China amassed 181 tonnes of gold more than any other country, a move intended to strengthen its currency and wean itself off of the US dollar. China would need to purchase 33,810 metric tonnes more gold in 2022 to catch up to the United States. This would be ten times more gold produced globally.

US national debt just crossed above $34 trillion for the first time, and if debt is headed higher, it may make sense to consider an investment in physical gold and gold mining stocks. The renewable energy market saw significant strides in 2023, with over 440 gigawatts of added capacity.