Commodity Calls: Week Ending 26 July 2024

Gold slides on a stronger US dollar, India secures its supply of critical minerals, and oil traders wait for the OPEC meeting.

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

• India slashed its imports tax on gold from 15% down to 6% which could potentially bolster physical gold demand through jewelry manufacturing.¹ The country also reduced the holding period required for long-term capital gains on gold, from 36 months down to 24 months, and the long-term capital gains tax rate from 20% down to 12.55%.² India is the world’s second largest consumer of the precious metal behind only China.

Bearish

• Positive economic data in the US has helped buoy the US dollar, putting pressure on physical gold. US GDP QoQ came in at 2.8%, much higher than the 2.0% analysts had expected and the 1.4% seen a quarter prior.³ US Core PCE also remained low, up 0.2% MoM as markets had expected.⁴

Explore physical gold with GOLD.

Transition Metals

Bullish

• India has waived import duties on 25 minerals considered critical to electrification and clean energy.⁵ Minerals such as lithium, copper, cobalt, and rare earth elements will all be exempt from customs duties. India expects the exemptions to boost domestic processing and refining of these minerals, improving their availability in the country.
• India also plans to apply for licenses which would enable it to participate in the deep-sea mining of critical energy-transition minerals.⁶ The country has reportedly been exploring ways to own and develop critical minerals assets and secure its own supply chain. India will apply to the UN-backed International Seabed Authority for exploration licenses in the Pacific in 2025.⁷

Bearish

• The lack of any meaningful policy shifts coming out of China’s historically impactful ‘Third Plenum’ meeting will likely weigh on transition metals.⁸ China is the world’s leading consumer of critical metals and leads the world in the buildout of clean energy technologies.

Explore transition metals with GMTL.

Crude Oil

Bullish

• Positive economic data in the US has helped support crude oil prices by reinforcing the likelihood of a “soft landing”. US GDP QoQ came in at 2.8%, much higher than the 2.0% analysts had expected and the 1.4% seen a quarter prior.⁹ US Core PCE also remained low, up 0.2% MoM as markets had expected.¹⁰

Bearish

• Oil traders have sent the commodity lower in the leadup to the OPEC’s upcoming August meeting. Reports from OPEC officials have suggested that, despite disappointing crude oil demand from China, the bloc does not have any plans to reduce production.¹¹

Explore crude oil with BCOM.

^{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 30/07/2024. 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.}