Commodity prices nudged up slightly in March just ahead of the steep sell-off in gold mid-April.
Scotiabank's Commodity Price Index rose 1.6 per cent month over month. Traders are bracing for more uncertainty following a reality check in China's economic growth, which rose less than expected at 7.7 per cent in the first quarter of 2013.
Oil and gas was the strongest sub-category as prices rose 6.8 per cent from February. Natural gas reached its highest level since July 2011 as the winter dragged on in North America.
Another bright spot were lumber prices, which Scotiabank sees rising once the third quarter starts and the housing sector begins to lift the U.S. economy off the ground.
Metals and mining fell 3.7 per cent, dragging the index lower. The price loss included both base and precious metals. Traders punished gold even further earlier this month after Cyprus pondered selling off bullion to prepare for its bailout, leading to the steepest two-day drop in 30 years.
The overall index is nearly 16 per cent lower than the peak it reached two years ago.
"Firmer overall prices in March were likely a surprise to financial markets," said Patricia Mohr, Scotiabank's Vice-President of Economics and Commodity Market Specialist.
Scotiabank predicts weakness ahead for industrial metals like copper and nickel due to a bulge in supply. Although copper profit margins are high at the current price, Scotiabank forecasts prices to fall below the $3.00 mark in 2015 before rebounding later this decade.