Commodity Calls: Week Ending 28 March 2024

Western Australia urged to reconsider uranium bans, US sanctions weigh down crude oil shipping, and gold rises on Fed’s rate cut promise.

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.

Uranium

Bullish

  • The Western Australian Chamber of Commerce and Industry has recommended the state overturn its ban on uranium mining after a 12-month long inquiry into its costs and benefits.1 The report states the overturning of the law could create up to 9000 jobs and produce uranium worth more than $1 billion per year.2
  • Electricite de France SA is in talks with Orano and Westinghouse Electricity to construct a new uranium conversion facility in Western Europe and reduce reliance on Russian supply chains.3 The EDF currently uses a Rosatom-owned plant in Siberia to recycle uranium used in some of its reactors – Rosatom is a Russian state-owned company which processes most of the world’s uranium fuel.

Bearish

  • Uranium prices have fallen after hitting a 16-year high of around US$106 per pound in January.4 Profit-taking by speculative traders may continue to be a headwind in the near-term until prices stabilise.

Explore uranium with ATOM.

Crude Oil

Bullish

  • US’ tightened sanctions against Russian oil last month have significantly raised the cost of freight.5 More than half of the current per-barrel shipping cost can be attributed to Western sanctions.
  • Traders are buying the most crude oil since 2020.6 According to Reuters, traders bought the equivalent of 140 million barrels of crude in a single week last month.7 This comes as OPEC+ supply cuts have started to fully materialise, signalling the possibility of a crude deficit in 2024.

Bearish

  • Oil prices fell early last week after the US Energy Information Administration reported US crude stockpiles unexpectedly rose by 3.2 million barrels.8

Explore crude oil with BCOM.

Gold

Bullish

  • Gold has hit yet another all-time high of ~US$2265 driven by increasing investor confidence in the Fed’s June rate cuts, as well as safe haven purchases from both private investors and central banks.9 Chinese investors, especially, have used gold as a hedge against real estate sector woes.

Bearish

  • Gold’s price has become increasingly reliant on Fed rate cut expectations. Should rate cuts fail to materialise as early as June, prices may fall.

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 03/04/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.