Commodity Calls: Week Ending 12 April 2024

Gold rallies on rising geopolitical tensions, crude oil demands a war-risk premium, and copper supply stays lacking.

Join Global X each week for ‘Commodity Calls’ to explore all the recent signals and developments that occurred in the world of commodities.

Looking for more? Check out this week’s Market Moves and Thematic Spotlight.

Gold

Bullish

• Gold hit a new all-time high of ~US$2430 last week as geopolitical tensions flared in the Middle East after Iran launched more than 300 drones and missiles toward Israel.¹
• March producer price indexes for US came in softer than expected at 2.1% year over year. The easing figure helped allay investor concerns that Fed rate-cuts were off the table for 2024.

Bearish

• US inflation came in hotter than expected last month, stoking fears that near-term Fed rate cuts will be pushed back. Core PCE, the Fed’s preferred inflation measure, was up 3.8% YoY for the month of March, higher than analyst expectations of 3.7%.²

Explore physical gold with GOLD.

Crude Oil

Bullish

• Crude oil prices could climb after geopolitical tensions flared in the Middle East between Iran and Israel.³ Iran is a major producer of crude oil, responsible for up to 3.3% of global supply.⁴ The possible escalation of conflict between Iran and Israel has demanded a war-risk premium from crude oil traders.

Bearish

• US crude oil inventories rose by 3 million barrels according to the American Petroleum Institute, much higher than the 2.4 million barrels expected by analysts.⁵ The US Department of Energy also reported that crude inventories in the Strategic Petroleum Reserve climbed by 0.6 million barrels, totalling 364.2 million barrels, the highest mark in a year.⁶

Explore crude oil with BCOM.

Copper

Bullish

• Copper prices have soared to heights not seen since June 2022 after Chinese manufacturing PMI expanded for the first time in five months, signalling a possible stabilisation of the economy.⁷
• China’s top copper smelters have once again proposed to cut production by up to 10% as the producers contemplated a shortage of raw copper concentrate.⁸

Bearish

• US inflation came in hotter than expected last month, stoking fears that near-term Fed rate cuts will be pushed back. Core PCE, the Fed’s preferred inflation measure, was up 3.8% YoY for the month of March, higher than analyst expectations of 3.7%.⁹

Explore copper with WIRE.

^{Forecasts are not guaranteed and undue reliance should not be placed on them. This information is based on views held by Global X as at 16/04/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.}

^{Brokerage commissions will reduce returns.}

^{This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information is not intended to be individual or personalised investment or tax advice and should not be used for trading purposes. Please consult a financial advisor or tax professional for more information regarding your investment and/or tax situation.}