Investors remain cautious on commodities despite a softer dollar, citing insufficient global demand, particularly from China, to sustain a rally.
A softer dollar, driven by a less hawkish Federal Reserve, has not sparked a broad commodity rally. Institutional investors continue to sell metals and mining stocks, while emerging market commodity-linked debt and currencies show limited strength despite lower U.S. real yields.
Earlier this year, commodities benefited from expectations of dollar debasement, but that trade has stalled. Analysts note that without stronger global demand—especially from China—easier financial conditions alone are insufficient to revive commodity-linked assets. Gold remains an exception, but other commodities lack momentum.
The outlook hinges on growth signals. If U.S. economic data weakens further, the dollar may stay soft, but without a credible demand recovery, commodities are unlikely to regain their earlier strength.