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Metals

Precious Metals Update

Gold’s lustre to return in 2023

Having fallen sharply in Q2, we think that the gold price is now close to a cyclical trough. What’s more, the price should revive a little in 2023 as markets factor in the prospect of US monetary tightening.

3 August 2022

Commodities Update

The boost from China reopening is now behind us

China’s PMIs fell in July, weighed down by soft export orders. However, we think that China’s economy troughed in H1 2022, and that a modest pick-up in H2 should give some support to commodities prices.

1 August 2022

Commodities Outlook

Prices to find a floor

While non-energy commodities prices may fall a little further, we think the big move down in those prices is now behind us. Admittedly, the demand outlook has undeniably deteriorated in recent months, but many of the supply risks that prompted prices to soar earlier in the year are still with us. Moreover, our forecast of persistently high energy prices means that the cost of production of most other commodities will remain elevated for much of this year and into 2023.

28 July 2022

Our view

Metals prices have slumped in the last month or so on concerns about slower global economic activity, particularly in metals-intensive China. Even without the plunge in economic activity associated with the country’s zero-COVID policy, China’s economy has been slowing. That said, the government is enacting some stimulus policies, including infrastructure spending plans and incentives for the auto sector, which should at least put a floor under metals demand. Supply is expected to remain constrained because of historically high energy prices, but we expect production in China to rise this year. Taking this all together, we expect metal prices to fall a little further this year and into 2023.

Latest Outlook

Metals Outlook

Prices to succumb to weaker demand before long

Soaring energy prices have given a renewed boost to industrial metals prices in recent months but, if we are right, and power costs ease back from April, we think prices will fall sharply later in 2022. After all, demand for metal from key consumer China has already fallen a long way and is likely to remain subdued throughout the rest of the year, particularly in the metals-intensive construction sector. Meanwhile, tensions between Russia and Ukraine have been stoking self-haven demand for precious metals. However, assuming there are no-long lasting repercussions, we think prices will fall as rising US real yields will curb investment demand and result in a somewhat stronger US dollar.

27 January 2022