Commodity Roundup: ANZ keeps yr-end gold PT of $2,300; WTI futures top $85

April 2, 2024

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Gold prices (XAUUSD:CUR) rose on Tuesday, trading close to the record high level hit in the previous session, on growing rate cut expectations, while U.S. crude futures hit $85 for the first time since October amid signs of tightening supplies.

“Gold’s recent price rise above $2,200/oz came ahead of our expectations,” ANZ said in a note. “Increasing geopolitical risks come to the fore to favour haven demand. The market is ignoring expectations around the Fed’s easing of monetary policy and remains more focused on rate cuts occurring in the second half of 2024,” analysts said.

ANZ further says, it remains positive on the price, but a pull-back looks likely without fresh supporting fundamentals in the second quarter. ANZ has a year-end price target of $2,300/oz.

On platinum (XPTUSD:CUR), the brokerage says, prices should find support at its current level on supply risks and Pd-to-Pt substitution demand.

Turning to energy commodities, the brokerage notes that, global oil supply growth is likely to slow with non-OPEC output decelerating and OPEC+ production curbs. Expects U.S. oil incremental output to fall 300kt against 1mb/d last year, with production struggling to maintain a record high of 13.3mb/d amid falling rig counts and stable productivity.

On the day, oil prices found support from signs that demand may improve in the world’s biggest oil consuming nations, China and the U.S., and growing conflict in the Middle East that could affect supply from the region. U.S. crude futures (CL1:COM) were trading above $85 a barrel in New York for the first time since October.

“The bullish catalysts for oil prices continue to pile up, with stronger-than-expected economic conditions in China and the U.S. offering a more optimistic demand outlook, while geopolitical tensions in the Middle East continue to heat up with the involvement of Iran,” IG market strategist Yeap Jun Rong told Reuters.

Additionally, OPEC’s voluntary production cuts and Russia’s deepening its production cuts to 9mb/d by the end of June 2024 are expected to tighten oil flows as demand recovers from the seasonal low. ANZ expects oil prices to find support near $85/bbl in the second quarter.

Elsewhere, the coal market remains in focus following the collapse of Baltimore’s Francis Scott Key Bridge after being struck by a cargo ship, adding to a supply-chain snag for commodities, and coal in particular, Bloomberg reported. The Port of Baltimore is the second-largest US exporting hub for the fossil fuel, accounting 28% of total shipments last year, the report said, adding, annual exports surged to 28 million last year due to growing demand from Asia.

The EIA expects the temporary closure of Baltimore’s port while cleanup efforts are underway will affect export volumes this year.

Potential stocks to watch: Global Gas (HGAS), Austin Gold Corp (AUST), Atlas Lithium (ATLX), Coeur Mining (CDE), Iamgold (IAG), Chemours (CC), Lavoro (LVRO), Captivision (CAPT), NexGen Energy (NXE), Dorian LPG (LPG).

Recent Commodity Price Movements and A look At Some ETFs