Global commodity markets look set to undergo a major change in tone over the coming quarter as the rampant gains that have characterized the pandemic era give way to a more muted performance. Or to put it another way, raw materials are about to become a whole lot less fashionable.

In the three months to September, central banks including the Fed will go on moving toward drawing back monetary stimulus, while the supply bottlenecks that have aided run-ups in prices clear. At the same time, China will likely press on with its campaign to beat back prices, too. Against this backdrop, commodities will lose some of their heady momentum, and likely attract less funds. A revival in the dollar could pose another headwind.

The Bloomberg Commodity Spot Index — which hit a decade-high this month — is dominated by a magnificent seven: gold, WTI, natgas, Brent, corn, copper and soy. This septet accounts for more than half the index’s weighting. Of these, gold will face headwinds as Treasury yields rise; crude should be kept in check as OPEC+ returns more barrels; copper has seen already seen softer demand; and corn and soy have come off the boil. Natgas is harder to fathom.

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