Broad Sell-Off Across All Commodity Sectors as Sentiment Returns to 2022 Levels
Claire Weston
Commodities fell indiscriminately in June. Zijin Tianfeng Futures' proprietary sentiment gauge hit -9.2, staying in extreme territory for four straight days — a depth seen only twice in five years, as markets replay the 2022 script of geopolitical panic followed by monetary tightening.
A sentiment reading of -9.2 — how rare is that?
Zijin Tianfeng Futures' proprietary sentiment indicator bottomed at -9.2, spending four consecutive days below the -6.5 extreme threshold.
Only two comparable episodes exist in the past five years: June–July 2022 (trough at -15.03) and August 2024.
This means → current pessimism is near historic extremes, but still short of the 2022 nadir.
Why does this look more like 2022 than 2024?
2022 and 2026 share the same two-act script: geopolitics ignites a supply panic in H1, then monetary tightening takes over as the dominant narrative, and commodities sell off at the switch.
2024 was fundamentally different — a "policy vacuum" adjustment after rate hikes ended, with direction settled but timing unclear.
In plain terms = both 2022 and now are "first a scare, then a squeeze." 2024 was just "the squeeze loosened but no relief arrived yet."
Same geopolitical shock — why did commodities react differently?
Crude oil: this cycle's absolute peak was lower than 2022's, but the rally was actually larger.
Aluminium: this cycle's rally was notably weaker than 2022's. The reason — Middle Eastern smelters can restart once the Strait of Hormuz reopens; the curtailment is temporary. In 2022, the Russia-Ukraine conflict caused permanent shutdowns at European smelters.
This means → for the same type of geopolitical shock, whether lost output can come back sets the ceiling on price elasticity.
How did the monetary-policy leg play out in 2022?
The root cause of the June 2022 commodity rout: the market's dominant narrative shifted from geopolitics to monetary policy. The Fed hiked 50 bp in May, then 75 bp each in June and July, pushing the effective fed funds rate from 0.33 % to 1.68 %.
Panic subsided on two catalysts: the July 27 hike of 75 bp came in below the feared 100 bp, and November–December CPI fell to 7.7 % and 7.1 %, beating expectations — only then did markets accept that inflation had peaked.
This reflects a broader pattern: extreme pessimism needs both a policy signal and data confirmation to unwind. Neither alone is enough.
What order will the rebound follow this time?
Zijin Tianfeng notes that current liquidity and inflation intensity are well below 2022 levels, yet markets react more violently to each data release — because the Fed's ambiguous stance amplifies short-term swings.
Based on 2022 sector-by-sector turning points, the expected rebound sequence is: precious metals first → base metals next → chemicals and ferrous metals lag → agriculture last.
But for base metals, the call is a "bounce," not a "reversal." The 2022 bounce was a recalibration on expectations of smaller hikes; the current setup faces a directional policy shift, so the bounce may be weaker.
When is the right time to act?
Before end-July: sentiment inertia has not cleared — not the time to bottom-fish.
August: watch US CPI, PCE, and employment data closely. If marginal improvement appears, a tentative entry into precious metals becomes reasonable.
September Fed meeting: the key inflection point. The policy statement will set direction; a right-side entry signal requires a clear dovish pivot or an explicit end-of-tightening signal.
In plain terms = the September Fed meeting is this cycle's "verdict" — whether the bounce can mature into a lasting recovery depends on what comes out of that room.
Content is for reference only, not financial advice.