Drop in metal prices hurts commodity index

A decline in the price of industrial metals helped bring the Scotiabank’s all-commodity price index down by 8.2% in July compared with the previous month.

Senior bank economist Patricia Mohr said the fall in metal prices resulted from a normal slowdown in buying during the summer and reduced inflation-hedge buying by investors.

Metal prices in late August, Mohr pointed out, remained at historically high levels. “Strong U.S. industrial production and capital goods orders in June/July suggest the powerful U.S. economic expansion will push up metal prices again in the fall,” she said.

The metals and minerals index dropped by 11.2% in July. Also contributing to the fall was a 1.5% decline in the oil and gas index.

The all-commodity index, which is up almost 16% over the past year, tracks export prices of a variety of Canadian commodities, which are weighted according to their 1984 export values.