Commodities increased yesterday on speculation that China was set to loosen monetary policy


A range of commodities saw price increases yesterday, but the rally has tailed off today.

The S&P GSCI Index, which includes 24 commodities, increased by 1.9 per cent yesterday to 664.10 – the highest level since 3 January. Since October 2011, global commodity prices in the index have risen by 15 per cent when they hit a ten month low.


This rise was driven by speculation that China is planning to loosen its monetary policy after its growth slowed in the last quarter of 2011 to 8.9 per cent. However, this was the slowest expansion of China’s economy in ten quarters.

However, the rally did not continue and most commodities have either been stable or dropped back a little in early trading this morning, with traders blaming that on some profit taking occurring this morning to take advantage of yesterday’s rally.