The latest quarterly economic outlook from Barclays Capital includes a relatively upbeat chapter on commodities. As the strategists summarise:

Whilst the global economy still faces major uncertainties, the growth outlook for the remainder of 2010 looks reasonably benign, fundamentals are improving steadily in many individual commodity sectors and market participants may be underestimating the potential for significant price gains in Q4.

In highlighting the “nervous drivers” of demand among commodity investors, BarCap notes that August saw the first net outflow of funds from commodities since the bank started tracking these flows in 2009. Gold, however, bucked this trend; it has accounted for around a third of the US$29bn in commodity inflows so far this year. This, in itself, reflects the unease over the economic outlook that drove investors to trim exposure to other commodities. Although BarCap expects this anxiety to become less acute and overall commodity demand to recover in the fourth quarter, “the path ahead is likely to prove bumpy”.