Commodity investors fear the future in the Trump era: Goldman

Singapore

POLITICAL uncertainty means there's no time like the present when it comes to commodities trading, according to Goldman Sachs Group Inc.

Traders are less willing to buy and sell long-dated futures because of increasing risks associated with trade wars and other geopolitical fissures springing up around the globe, Jeff Currie, head of commodities research at Goldman, said in a Bloomberg interview.

Instead, more activity is moving into the nearest month's contract.

"The willingness of people that trade forward commodities has dropped because they're scared about the future and they move up to the prompt or they go hand to mouth," he said.

"That dynamic is becoming increasingly prevalent across commodity markets," Mr Currie added.

Trading volume for front-month contracts as a share of all contracts has increased for commodities such as West Texas Intermediate oil and Brent crude, as well as soyabeans and wheat, according to data compiled by Bloomberg.

To be sure, the trend isn't universal, as the share has fallen for London metals contracts such as aluminium and copper.

Global markets for everything from commodities to equities have been rocked for the past year by geopolitical chaos, with investors being kept on edge by everything from a trade war between the US and China to President Donald Trump's decision to reimpose sanctions on Iranian oil and an ongoing partial shutdown of the US government. BLOOMBERG