In the second quarter of this year, metals are emerging as frontrunners in the commodities sector, propelled by significant price reassessments in gold, silver, and copper.
Citi strategists highlight the remarkable performance of these metals, considering their historical sensitivity to fluctuations in the US dollar and interest rates. Despite the greenback’s appreciation and a notable increase in Treasury yields, prices for gold, silver, and copper have surged.
The strategists express confidence in the continued momentum of this rally, projecting a potential further increase of 5-10% in the short term (0-3 months) and a more substantial rise of 15-20% in the medium term (6-12 months).
While anticipating a minor pullback in gold and silver markets before the conclusion of the second quarter, Citi strategists foresee a robust resurgence in prices during the latter half of 2024. Their projections indicate a potential rise to around $2,500 per ounce for gold and $30-32 per ounce for silver.
Moreover, Citi strategists emphasize the substantial market cap share and index weights of these metals, suggesting that a rally could have broad implications for commodities returns and market sentiment. This optimism is particularly pronounced against a backdrop of economic reflation and a potential soft landing.
The structural rally in Comex gold is further bolstered by a bullish momentum reading, with steady increases in exchange open interest (OI) and trading volumes in recent weeks. These indicators point to robust liquidity and growing investor interest in gold.
Regarding copper, Citi strategists anticipate a similar, albeit slightly less bullish, technical trajectory.
