Economists at TD Bank Financial Group are warning that oil and base metal prices are ripe for a 20% correction later this year.

The prediction comes as oil, gold, silver, nickel, copper and zinc are all trading at all-time or multi-decade highs.

The authors of the current TD Economics commodity price report say the recent buying wave is due more to speculation than to market fundamentals.

Speculation in oil and gold, they write, has been led by geopolitical worries. In base metals, the report authors say, the speculative frenzy has been driven by little more than momentum.

For example, they argue, inventories of base metals have been building in the past few months.

“In our view, base-metal prices have risen too far, too fast, setting the stage for a correction in the months to come,” they said.

“In light of the fact that the activities of speculators are erratic in nature, we are now even more steadfast in our view that a correction in crude oil and base metal prices in the order of 20% is in store for later this year,” said TD economists Derek Burleton and Priscila Kalevar.

That would bring crude oil prices to $55 US a barrel by the end of the year – a level which the authors say is still $10 US a barrel higher than market fundamentals would predict.

The co-authors say the pull back will be triggered by signs that U.S. economic growth is slowing, which they say should happen by the end of the summer.

“In the meantime, we don’t rule out further speculative activity driving prices even higher,” they wrote.