Gold, silver, and copper rally could add another 15-20% – Citi
Metals are spearheading gains in the commodities sector this second quarter, driven by significant re-evaluations in the prices of gold, silver, and copper.
According to Citi strategists, this performance is particularly impressive considering the typical sensitivity of both precious and industrial metals to the strength of the US dollar and shocks in interest rates.
“Indeed, prices for the underliers have soared despite the appreciating greenback and steep back-up in yields across the Treasury curve,” the strategists said.
“Our base case suggests the gold, silver, and copper rally has room to push another 5-10% over the next 0-3m and perhaps 15-20% in a 6-12m context,” they added.
Citi strategists anticipate a potential minor pullback in gold and silver markets before the end of the second quarter, but expect prices to surge in the second half of 2024, with gold potentially reaching around $2,500/oz and silver $30-32/oz.
They believe the significant market cap share and index weights of these metals, suggesting that a rally could broadly boost commodities returns and sentiment, especially against a backdrop of economic reflation and a soft landing.
“The structural rally in Comex gold is supplemented by a bullish momentum reading, where exchange open interest (OI) and trading volumes have seen steady rises and spikes over the last few weeks indicating robust liquidity and growing investor interest,” the Citi team noted.
Copper is expected to follow a similar, albeit slightly less bullish, technical path, they added.
Citibank analysts are bullish on gold, silver, and copper according to a recent investing.com article [1]. They predict these metals could rally another 15-20% in the next 6-12 months [1]. Here’s a breakdown of their reasoning:
- Recent Strength: Despite a typically negative influence from a strong dollar and rising interest rates, gold, silver, and copper have all experienced significant price increases this year [1].
- Upward Trajectory: Citi analysts believe this momentum will continue, with gold potentially reaching $2,500 per ounce and silver reaching $30-32 per ounce by the end of 2024 [1].
Why this might be happening:
- Economic Reflation: A potential economic reflation scenario, where inflation rises moderately alongside economic growth, could be driving demand for these commodities as a hedge against inflation [1].
- Soft Landing: If the economy experiences a soft landing, where inflation is controlled without hindering economic growth too much, it could also be a positive factor for these metals [1].
Keep in mind:
- Market Predictions: This is a prediction by analysts and not a guarantee of future performance.
- Investment Decisions: It’s important to do your own research before making any investment decisions.
Overall, Citi’s outlook on gold, silver, and copper is positive, but remember, commodity prices can fluctuate significantly.