Commodity Calls: Week Ending 29 November 2024

The copper industry remains in focus with potential M&A activity restarting and record production from Chile, while oil prices retreated last week amid downgraded forecasts. Gold faced a tough month but could gain appeal as an inflation hedge following an upward surprise in the US Federal Reserve’s preferred inflation gauge.

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

Copper

Bullish

  • BHP can relaunch a bid to acquire Anglo American as the six-month standstill period mandated by London’s takeover rules has expired following its earlier offer withdrawal. Speculation remains that BHP may renew its pursuit of Anglo American, motivated by its goal to expand its copper portfolio amid projections of a global copper deficit of 10 million metric tons within the next decade.1
  • Chile registered its biggest month of copper production this year, and the best October since before the COVID-19 pandemic.2 The largest supplier of copper has rebounded from project setbacks, with Chile’s production steadily increasing after a 20-year decline driven by multibillion-dollar investments aimed at modernising aging operations and addressing challenges posed by declining ore quality.

Bearish

  • Copper saw some earlier losses last week driven by a stronger dollar and renewed concerns over US-China trade uncertainties.3 Metal markets are closely monitoring upcoming economic decisions from Chinese leadership, including the Politburo meeting in early December and the Central Economic Work Conference in mid-December, both of which could reshape global demand patterns.
  • China’s imports of scrap copper are expected to decline as some traders have halted purchases from the United States, potentially adding short-term volatility to the market.4 Chinese scrap importers are approaching cautiously, concerned that escalating US-China trade uncertainties could drive up procurement costs.

Explore copper with WIRE.

Crude Oil

Bullish

  • All attention is on OPEC’s upcoming meeting on December 5th, which was delayed by a few days, with market expectations suggesting that a return of barrels is unlikely.5 Weak fundamentals may encourage the OPEC+ group to extend their commitment to production curbs for another month.

Bearish

  • Analysts have cut forecasts for oil prices, downgrading their outlook for the seventh consecutive month.6  Weaker global demand growth, as well as easing of the threat of supply disruptions in the Middle East have seen oil prices retreat with Brent crude oil trading around ~US$72 a barrel at the end of last week.
  • Libya has achieved a new oil production record, reaching 1.38 million barrels of crude per day.7 This milestone follows efforts to stabilise operations after earlier disruptions caused by political disputes and shutdowns at production sites.

Explore crude oil & energy with BCOM.

Gold

Bullish

  • The US Federal Reserve’s preferred inflation gauge accelerated, strengthening expectations that the central bank will adopt a more cautious approach to lowering interest rates. Core PCE rose 2.8% year-over-year, and a potential increase in inflation expectations could support the precious yellow metal, given its role as an inflation hedge.8

Bearish

  • Gold prices experienced their worst monthly performance in over a year, driven by the impact of Trump’s election victory and broader sentiment.9 The combination of a strengthening US dollar, easing geopolitical tensions and a broader risk-on rally weighed heavily on the precious yellow metal.

Explore 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 03/12/2024. 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.