Ongoing global risks could continue to drag on commodity markets and related exchange traded funds, but it may leave opportunities to jump into some commodities, notably precious metals.

On the recent webcast, The Global Economy: Divergence, Commodities and the Dollar, Helen Henton, director commodities at Roubini Global Economics, points out that global economies still face some significant headwinds, notably commodity exporters in the emerging markets, with Latin America expected to be the weakest region in 2016 and Brazil remaining in recession.

Consequently, Henton expects some painful supply adjustments before prices are able to stabilize, even after the significant declines in industrial metals and soft commodities this year.

Additionally, disinflation is intensifying as many global central banks engage in loose monetary policies, but the low inflation will also enable the Federal Reserve to hike interest rates slowly. The diverging monetary policies would suggests a stronger U.S. dollar, Henton added.

While a stronger dollar, disinflation and potential weakness overseas could continue to pressure commodities, Mike McGlone, head of U.S. research at ETF Securities, argues things are looking better for some commodities.

For instance, McGlone believes key gold bearish factors may be ending, including Fed tightening expectations, above average stock returns and low volatility, among others. Gold futures may also be pointing to a bottom as the market has moved to backwardation – later dated contracts are cheaper than the spot price, which suggests that there is excess demand or constrained supply, and open interest jumped in 2015.

“Gold, silver, platinum and palladium appear to have bottomed,” McGlone said. “The Fed tightening consensus is at risk of a similar fate as the 2014 consensus of higher bond rates and increasing commodity prices.”

The ETFS Physical Swiss Gold Shares (NYSEArca: SGOL) has increased 5.5% over the past three-months but is still down 2.5% year-to-date, with Comex gold futures trading around $1,147 per ounce.

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