Commodity Calls: Week Ending 2 August 2024

Chinese copper demand looks to recover, Kazatomprom boosts its uranium output, and investors rush to gold as tensions flair in the Middle East.

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.

Copper

Bullish

  • China’s copper market has shown tentative signs of recovery as domestic import premiums have recovered above 0.1 Copper stockpiles traded at a very rare discount on the SHFE in June after prices rallied above US$11,000 per tonne in May, dissuading Chinese purchasing. Copper usually trades at a premium in China as the country typically consumes more copper than it produces.
  • The State Grid of China, one of the world’s biggest buyers of copper, is planning a 13% increase in spending this year, buoying market sentiment for the industrial metal.2

Bearish

  • Chinese manufacturing PMI remained in contraction for the month of July.3 The economic gauge, which measures manager expectations for demand, has now fallen for three months in a row.

Explore copper with WIRE.

Uranium

Bullish

  • The new India budget announcement recognised the significant role of nuclear energy in the country’s future energy mix and the country has announced new plans to partner with private companies to develop SMRs in 2024-25.4
  • Sweden and USA have signed a nuclear memorandum which will seek to provide a framework for cooperation between the two nations when developing, researching and innovating on technologies related to nuclear energy for peaceful purposes.5

Bearish

  • Kazatomprom, the world’s largest producer of uranium, upgraded its 2024 full year production guidance and boosted its H1 2024 production by 6% YoY.6 Markets had priced-in poor production from Kazatomprom for the year due to a sulphuric acid shortage in 2023 which has since eased.

Explore uranium with ATOM.

Gold

Bullish

  • Gold’s appeal as a safe haven asset rose as tensions once again escalated in the Middle East between Iran and Israel.7 Iran has stated that it intends to retaliate after, Ismail Haniyeh, the political leader of the Hamas was killed by an Israeli airstrike in Iranian territory.
  • The Fed’s decision to leave rates unchanged at its August meeting helped buoy gold prices as the USD weakened.8 A weak US jobs report also increased the likelihood of a 50bps rate cut at the Fed’s September meeting.9 Non-yielding assets such as precious metals have historically outperformed when interest rates decrease.

Bearish

  • Increasing market volatility due to a global unwinding of the Yen-based carry trade has also hit gold prices as speculators were forced to liquidate their assets.10

Explore physical gold with GOLD.

 

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 06/08/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

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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.