Commods rally won't last unless demand recovers

NEW YORK (Reuters) – Commodities have outperformed the expectations of many analysts who bet on an anemic recovery after last year’s crash, but the climb could start slowing if investors seek more proof the recession is over.

A declining dollar and rallying equities markets have sparked wariness about potential inflation and drawn investors into commodities.

But many wonder whether actual demand for commodities will materialize with the United States losing hundreds of thousands of jobs a month. Investors may want to see improvement in the U.S. employment market, vital to the global economy, before pushing prices of raw materials higher.

Key industrial commodities, such as copper and crude oil, have seen prices double since last year’s lows, while inventory levels remain high.

Reuters