Global investors favouring cash over commodities

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Global investors are not optimistic on investing in US and world economies. They prefer to hold cash over commodities as global outlook for commodities look sluggish. This was the finding of a survey done by Bloomberg.

Investors intend to trim down their investments in commodities. End of Federal Reserve's bond-buying programme, budget cuts by US lawmakers and improvement in US and global economies are the probable reasons that prompt investors to reduce their investments in commodities. US economic growth slowed to 1.8% in the first quarter of this year, down from 3.1% in the last quarter of 2010.

Commodities turned volatile

Commodity prices suffered their biggest decline in more than two years, led by the steepest drop in oil prices since the fall of 2008. Investors expect oil prices to fall further in the next six months as US and global economies are on the track of betterment.

The Standard & Poor's GSCI Total Return Index of 24 commodities dropped 11% last week, led by a 27% collapse in silver prices. The gauge fell 3.9% on Wednesday and another 0.9% by 9:29 a.m. in London on Thursday.

Global investors still consider equities to be among the most lucrative places for their money, with more than 1 in 3 forecasting that stocks will provide superior returns over the next year.

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