Commodity Calls: Week Ending 8 November 2024

Most commodities fell after Donald Trump’s US election victory, but long-term demand from renewable energy, power grid expansion, and data centers remains strong.

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

  • Oklo has secured an environmental compliance permit from the US Department of Energy and Idaho National Laboratory for its fission power plant site.1 This advances its plans to launch the first commercial advanced fission power plant in the US based in Idaho.
  • Poland and Japan have signed a memorandum to enhance cooperation in the nuclear sector.2 The agreement aims to support energy transformation goals and boost energy security, while also encouraging collaboration between Japanese nuclear companies and European partners in industrial technology development.

Bearish

  • Nuclear power stocks fell after the Federal Energy Regulatory Commission (FERC) rejected a Talen Energy deal to power Amazon’s data centers, citing potential impacts on nearby customers.3 The FERC’s decision may hinder tech companies’ efforts to secure nuclear energy for expanding data center needs, although Amazon remains committed to its Pennsylvania data center plans.

Explore uranium with ATOM.

Copper

Bullish

  • Accelerating global electrification and a renewed government focus on power grids are set to boost copper demand.4 A projected 20% increase in grid length worldwide over five years, led by China and supported by the US, could drive an additional 30 million tonnes of copper demand. This surge, spurred by grid investments in renewables, battery, and data centers, could strengthen copper’s bullish outlook.
  • Traders are betting that Donald Trump’s tariff threats on Chinese exports will prompt China’s National People’s Congress Standing Committee to boost stimulus measures to offset potential impacts.5 Despite copper initially falling after Trump’s election victory, these anticipated countermeasures may support the metal’s demand.

Bearish

  • A potential rollback on energy transition policies under Trump could create headwinds for renewable energy. As copper is crucial for solar panels, wind turbines, and other systems, any significant policy shift may impact demand for the red metal.

Explore copper with WIRE.

Gold

Bullish

  • Inflation expectations are rising with the 10-year US breakeven inflation rate rising to its highest in over six months.6 Since gold traditionally serves as a hedge against inflation, expectations of higher than anticipated inflation figures provide a potential tailwind for gold.
  • Rising geopolitical risks and US debt concerns support gold’s haven appeal. The US Congressional Budget Office projects that by 2027, US debt will reach levels not seen since World War II, which would further be exacerbated by Trump’s spending and tax pledge.7

Bearish

  • Gold price retreated 5% since its peak following Trump’s US election victory. Weakness in the precious metal was driven by a surging US dollar and rising Treasury yields, as the market priced in the impact of Trump policies on the US economy. The US dollar and real yields both have an inverse relationship with gold. The world’s largest gold-backed ETF also recorded its biggest weekly outflow in more than two years following Trump’s election win.8

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 12/11/2024. Investing involves risk, including the possible loss of principal. Diversification does not ensure a profit nor guarantee against a loss.

Brokerage commissions will reduce returns.

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.