Commodity Calls: Week Ending 3 January 2025

The US signs record billion-dollar nuclear power contract, gold contends with less rate cuts in 2025, and Chinese government action inspires oil traders.

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 Kazakhstani “Inkai” uranium mine, co-owned by Canada’s Cameco and state-run Kazatomprom, has suspended operations due to a bureaucratic holdup.1 Inkai produces ~15% of Kazakhstan’s uranium, which itself produces ~40% of global uranium.
  • The US General Services Administration has awarded a US$840 million contract to nuclear energy provider, Constellation Energy.2 The contract, which is set to begin in April, will require Constellation Energy to supply an estimated 10 million MWh of electricity to 80 federal facilities over the next 10 years.

Bearish

  • President-elect Donald Trump has promised to end the Russo-Ukrainian conflict as soon as possible, making it likely that the sanctions imposed against Russian-processed uranium by the Biden Administration will be lifted in 2025.3

Explore uranium with ATOM.

Gold

Bullish

  • President-elect Donald Trump has promised to raise tariffs globally for countries exporting to the US. When President Trump first announced tariffs in March 2018, ETF holdings for gold picked up as investors sought to hedge against market uncertainty.4

Bearish

  • The Federal Reserve’s December dot-plot indicated there may be fewer rate cuts than expected in 2025.5 The chart now shows just three rate cuts by the end of the year, a steep discount to the five cuts projected a few months prior. The gold price has historically improved with lower interest rates.
  • Investors have sold off gold-backed ETFs for a fourth straight year. Known ETF holdings of gold declined 3.2% in 2024.6

Explore physical gold with GOLD.

Crude Oil

Bullish

  • Stronger government action by China to spur economic growth is fuelling some optimism across oil traders. Chinese President Xi Jin Ping said in his New Year’s address that the country would hit its ~5% GDP growth goal and will look to implement more “proactive” policies to promote growth in 2025.7
  • Stricter implementation of US sanctions has reduced the supply of crude from countries such as Iran and Russia, causing oil prices to rally in the Middle East.8 Iranian oil, in particular, has struggled to find its way to customers after the recent wave of new US sanctions.

Bearish

  • The International Energy Agency expects a healthy supply overhang of 1.4 million barrels per day in 2025 despite extended supply cuts by the OPEC+.9 The projection accounts for a weaker than expected recovery by China, and a global shift toward electric vehicles.

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 07/01/2025. 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.