Commodities likely to remain largely range-bound in 2017 - Commerzbank

Oil and base metal prices have probably bottomed out in 2016. Oil production cuts announced by the OPEC have seen a steep bounce in oil prices on both sides of the Atlantic. Assuming full compliance of agreed cuts, the oil market should balance in 2017.

That said, US production is expected to rise in 2017 under the Trump administration. Higher oil prices, due to the OPEC announcement is likely to fuel further shale oil production. This should limit the upside for oil.

"Reflecting the high oil price volatility we expect a total return in the range -10% to 0%,” said Commerzbank in a report.

Following the strong recent run in base metals, a more cautious positioning seems justified in the short term. Demand will probably stay weak until after China’s week-long Lunar New Year holiday from January 27.

"With higher inflation, persisting political uncertainty and given the strong recent decline, gold should have some upside potential in 2017, despite an appreciating US dollar and rising opportunity costs of holding gold. We have pencilled in a total return of between 4% and 8%.” said Commerzbank in a report.