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Commodities: Gold and Grain Prices Go Up

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Resources that come out of the ground hinge on everything from the weather to how easily it is found in nature.

As a result, commodities can prove to be quite volatile and the effects can be far reaching.

1. Record harvest will pressure grain prices

The worst drought in nearly 50 years sent agricultural commodities skyrocketing in the summer. Wheat, soybeans, oats and especially corn were among the best performers in the markets this year.

In light of the devastation to many crops, farmers will ramp up planting to record levels next year. And if weather patterns return to normal, then production will also reach new highs and pressure grain prices along the way.

2. Gold will make another run for a record

As for resources that are found—not grown—in the ground, there's gold. The metal made a run for $2,000 twice this year but fell short. Will gold reach a fresh record in the New Year?

Signs that investors are returning to gold have already emerged with bullion holdings in exchange traded funds (ETFs) reaching a record.

Additional sovereign debt and continued pressure on the Fed to buttress the markets and economy will send gold on another run for that elusive $2,000 level.

3. Palladium market will swing to a deficit

The palladium market will turn to a deficit in 2013 on increasing demand in the auto industry -- where palladium is used in exhaust systems for cars.

Combined with decreasing global supply especially in South Africa and Russia, which control a majority of the world's palladium mines, a rally that began in earnest at the end of 2012 will ignite in the New Year.

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