According to Antaike, a research firm, strong fundamentals (demand-supply factors) and ample liquidity have made metals an attractive proposition for global financial investors amid bets on an early US rate cut, the escalating Middle East tension, and the ongoing war in Ukraine.
COPPER
Copper prices, often considered a “bellwether” of the global economy, rallied on concerns over reduced output due to supply disruptions while the demand outlook remains positive, buoyed by the green energy transition.
The three-month copper contract on the London Metal Exchange (LME) on Friday (April 19) climbed to a two-year high of $9,843 a tonne, up a total of 14% so far this year as investment funds continue to plow money into the asset. The metal used widely in electrical and construction sectors has jumped 16% since mid-February 2024.
The most-traded copper contract on the Shanghai Futures Exchange (SHFE) also hit a record high of 79,840 yuan ($11,025.80), up 14% year-to-date as well.
Antaike said in a report released late Thursday that copper could rally further, with the heavy inflows likely to continue until the US cuts interest rates.
“Bullish drivers are still intact. April has seen a huge amount of speculative flows moving into commodities,” said Alastair Munro, senior commodities strategist at brokerage Marex.
Citi recently also projected copper to continue its rally to $10,500 a tonne and average $10,000 in the second and third quarters of 2024. “On the risk side, we currently see the current momentum continuing into the next three months,” Citi said.
The first quarter of 2024 saw solid demand growth in copper, mainly from the new energy sector, including electric vehicles and wind power, as well as from information technology sectors such as electrical equipment and artificial intelligence-related data centers.
Copper prices on the LME and SHFE.
GOLD
Antaike expects the gold rally to continue to be supported by rising investment demand and increasing production costs. The research firm sees the uptrend continuing in the medium to long term, with prices potentially reaching $2,700 an ounce, on robust demand prospects in China and geopolitical uncertainties.
Gold has risen for five consecutive weeks as investors piled into the safe-haven asset amid heightened tensions between Iran and Israel, fueling concerns over a wider conflict in the region.
Spot gold was seen trading at $2,417.59 on Friday (April 19), inching closer to the record high of $2,431.29 reached last week.
After consolidating early in the week, gold prices rebounded later in the week after Israel-Iran tensions escalated to worrying levels.
“The geopolitical situation has increased the risk premium and is helping safe-haven gold,” said Peter Fertig, analyst at Quantitative Commodity Research.
Meanwhile, policymakers at the US Federal Reserve have come to a consensus that interest rate cuts are not yet warranted due to a slow pace of disinflation and the resilience of the US economy.
Commerzbank sees gold ending the year at $2,300, up from its previous forecast of $2,200, though they remain skeptical of further upside as gold’s rally runs counter to the trend of rising US interest rate expectations (higher interest rates tend to reduce the appeal of non-yielding bullion).
Gold price movements.
TIN, ALUMINUM, SILVER TO GAIN, LEAD AND ZINC TO LOSE
Antaike predicts a recovery in Chinese tin demand, which will add to strong consumption from solar energy, electronics, and automotive sectors.
Supply constraints, with output from major tin producer Myanmar yet to recover and the ramp-up of Indonesian tin mining remaining slow, have buoyed prices for the soldering metal.
Antaike expects Shanghai tin prices to range between 240,000 yuan and 275,000 yuan per tonne in the second quarter of 2024, while LME tin could trade between $31,000 and $35,000 a tonne during the same period.
The three-month tin contract on the LME hit a 22-month high of $35,100 a tonne on Friday (April 19) as funds bought aggressively amid supply concerns.
Antaike analysts also predict gains in aluminum and silver prices but see weak demand weighing on lead and zinc.
Benchmark aluminum on the LME traded at $2,659.50 a tonne on April 19 (up 7% this week); nickel at $19,235 a tonne (up over 8% this week), lead at $2,199.50 a tonne (up over 1% this week), while zinc stood at $2,849 a tonne (up 0.69% this week).
Tin price movements
Source: Reuters
