Commodity Calls: Week Ending 8 March 2024

Gold rallies to all-time-highs, Japanese nuclear plants come back online, and platinum group metal (PGM) miners start to feel the pain.

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

  • Gold prices rallied to hit an all-time-high of ~US$2200, breaking through the US$2000 resistance seen over the past two years.1
  • Gold’s breakthrough comes as US unemployment increased over the past month, improving the odds of a rate cut by June.2 Fed Chair Jerome Powell also confirmed in a testimony to the Senate that interest rates will likely come down soon.3 The Fed has grown increasingly confident that a soft landing is possible.
  • Central banks have purchased significant amounts of gold over the past year. The PBOC, for example, now owns more than 2200 tonnes of the metal, double the amount reported in 2015.4

Bearish

  • US core PCE figures released a week prior saw inflation rising by 0.4% in January. On a six-month annualised basis, inflation registered at 2.5%, which is above the Fed’s 2% target.5 Should high inflation persist at the next reading, odds of a near-term rate cut may decrease.

Explore physical gold with GOLD.

Uranium

Bullish

  • Japan’s nuclear energy generation is set to increase by 20% in 2024 as the final wave of reactor restarts begin to come online.6 Kashiwazaki-Kariwa No.7, and Onagawa No.2 will be two of the largest contributors, expected to add 2.17 gigawatts of power as they resume operations. The two reactors will also be the first reactors to restart in East Japan since the Fukushima meltdown in 2011.
  • Five US-listed uranium producers have announced they are reopening mines in Texas, Wyoming, Arizona, and Utah, after prices surged above US$100 for the first time since 2007.7

Bearish

  • Cameco, the world’s largest uranium miner by market cap, announced plans to increase production by as much as 33% in 2024.8 The recent rally in uranium prices have, in large part, been driven by supply restraints. Cameco’s elevated projections should help address some of those concerns.

Explore uranium with ATOM.

Platinum Group Metals

Bullish

  • Excluding Russian mines, which are the world’s largest sources of palladium, almost half of the world’s PGM producers were unprofitable in 2023 due to depreciating prices.9 This has meant that expansion projects have almost completely halted, and mine closures are now a distinct possibility.
  • Lower means of production may eventually drive prices higher as demand will eventually eclipse supply, causing a squeeze on the spot metal price.

Bearish

  • Anglo American Platinum, a major South African PGM producer, is potentially cutting 3700 mining jobs as Platinum and Palladium prices have fallen 17% and 44% respectively since 2023.10 Sibanye, a fellow South African miner, has already cut 2600 employees this year.11
  • Platinum and Palladium are both used in the construction of catalytic converters for traditional ICE vehicles. As demand for petrol vehicles decreases, industrial usage of these PGMS will also naturally fall.

Explore platinum group metals with ETPMPT and ETPMPD.