Biden Administration approves its first lithium project, palladium rallies on possible Russian sanctions, and geopolitical tensions renew crude oil’s risk premium.
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Lithium
Bullish
- The Biden Administration has approved its first ever lithium mining project in Nevada as it looks to support domestically produced lithium and reduce reliance on Chinese supply.1 The new mine will also be the first lithium mine permitted to be built in more than 20 years in the US.
- The EU and China have agreed to continue discussions on possible alternatives to EU important tariffs on Chinese EVs.2 Last week, China and the EU Commission confirmed the two parties took part in as many as eight negotiating rounds to find a mutually agreeable solution to levelling the playing field in the EU market. If no solution is agreed upon by the end of this month, the currently proposed import duties will come into force.
Bearish
- Lithium prospecting and mining activity is expected to slow significantly across Argentina as the critical metals price slump continues.3 Commodities consultancy, CRU Group, downgraded Argentina’s production forecast for 2027 by 10% and no longer sees the potential for Argentina to overtake Chile as the world’s No.2 lithium miner.
Explore lithium with ACDC.
Precious Metals
Bullish
- Palladium rallied almost 10% after the US government reportedly requested allies to sanction precious metals exports from Russia.4 Russia produces almost half of the world’s palladium with Norilsk Nickel alone accounting for roughly 40% of global output.
- Gold continued its weekly streak of all-time highs as investors homed in on the “debasement” trade as betting odds increasingly suggest a Trump presidency.5 A debasement trade is when traders hedge against the erosion of paper money. Many of Trump’s proposed policies are expected to increase inflationary pressures, which could lower the value of the USD.
Bearish
- Market bullishness on gold is near all-time high with almost 250,000 contracts net long on the precious metal as of last week.6 A well-subscribed trade is often a sign of positive sentiment but can also contribute to high volatility when new market information emerges.
Explore precious metals with ETPMPM.
Crude Oil
Bullish
- Geopolitical tension in the Middle East has renewed the war risk premium in crude oil prices. Israel launched a wave of missile attacks on Iran over the weekend as retaliation for earlier Iranian attacks, raising fears that the confrontation could escalate into an all-out regional war.7
Bearish
- Norway’s largest oilfield, the Johan Sverdrup, hit a record daily production of over 756,000 barrels in September.8 This number represented roughly 7% of Europe’s daily oil consumption.
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 29/10/2024. 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.
