Towards the end of 2014 there was a sharp sell-off in commodities and the oil price plummeted. While commodity prices have since stabilised, the future of the asset class remains uncertain.

While a drop in prices is usually indicative of over supply in the market, Paul Wilson, chief executive of the World Platinum Investment Council, sees demand as the main driver.

He explains: “Looking at commodities as a whole last year, there was significant impact on demand from declining economic growth in key markets such as China, which had an impact on price.”

It is of course worth bearing in mind that there is more to commodities than gold and crude oil as the asset class encompasses precious metals, such as silver and platinum, as well as coffee and cotton.

So have prices bottomed or should markets prepare for further falls in the prices of commodities?

There are winners and losers following the collapse in the price of oil, with oil-importing countries clearly the main beneficiaries, while oil exporters, like Russia, continue to suffer.

Jim Leaviss, head of retail fixed interest at M&G Investments, notes the events in the oil market provide a “potentially important” tailwind for the global economic outlook.

He points out: “The knock-on benefits of the huge price move should be significant on economies that are big users of the commodity, such as in the G7 countries. The current very low oil price levels help limit recessionary risk… for these key industrialised nations and provide an environment that tends to favour corporate bonds.”

Consumers are also benefiting from lower prices at the petrol pumps, but what are the implications for commodities investors? With the prospect of a muted performance from gold as well this year against the backdrop of a rising US dollar, how should investors position themselves in the asset class?

Oliver Wallin, investment director at Octopus Investments, predicts that the oil price will stay low.

“There is little to suggest the oil price will increase significantly in the near term, given the volume of supply,” he says. “Overall, cheaper oil should be good for consumers but is less welcome by investors, as oil companies and associated industries begin to drag on market returns. Only some of the savings gained by US households are actually being spent, with the focus more on savings or repaying debt.”

For Chris Beauchamp, market analyst at IG Group, commodities are essentially a bet on global growth.

“Outside of the US, that bet looks a shaky one, as central banks cut rates and deflation talk abounds,” he admits. “The prime example is China, which has cut its growth target (even if it has pledged fresh measures to boost performance), but all around the world the forecast is for a gloomy future in growth terms.”

He continues: “Combine this with a rising US dollar and high emerging markets exposure to that currency, and you have a recipe for disaster.”

So investors should not hold their breaths for a recovery in commodity prices as global growth remains subdued.

“With the engine of growth stalling,” observes Mr Beauchamp, “it looks like the bear market in raw materials has a lot further to run.”

Ellie Duncan is deputy features editor at Investment Adviser