Oil well with the pump jack in action. Alberta

The growing prospect of a soft landing is providing support for a commodities, particularly energy commodities, according to a new report from BMO Capital Markets.

In July, BMO’s Commodity Price Index — an export-based index that tracks 20 key commodities — rose by 4.7%, marking the largest gain since March 2022, the firm reported.

“Commodity markets have taken comfort in the ongoing resilience of the U.S. economy and signs that rate hikes are bearing fruit,” it said.

“Sentiment has been lifted further by a raft of measures by China’s authorities to revive its struggling economy.”

In particular, crude oil prices have been boosted by the economy’s resilience and Saudi production cuts, the report noted.

Additionally, key agricultural prices “have experienced a revival too but due more to the widespread drought, especially in North America, and Russian strikes on Ukrainian silos and ports,” BMO said.

While the bank raised its 2023 forecast for silver prices on the heels of its recent rally, it said it expects precious metals prices “to drift lower toward year-end as economic uncertainty abates.”

The bank’s economists continue to forecast global growth of 2.8% this year and next.