The general state of the commodities market in 2024 is characterized by cautious optimism, with a recognition of the high uncertainty and geopolitical risks that could impact the market. The global real GDP is forecasted to slow down to 2.7% in 2024, with challenges in China and a potential decline in global energy consumption adding to concerns. Commodities have faced various pressures, including mild winters reducing gas demand, adjustments in trade flows, and central bank tightening.
For specific commodities like gold (XAUUSD), silver (XAGUSD), and West Texas Intermediate (WTI) oil, there are several factors at play:
Gold (XAUUSD)
Precious metals like gold are expected to see an uptrend, with predictions of gold reaching new record highs in 2024. Factors such as expectations for the Federal Reserve to cut interest rates and a potential weakening of the US dollar could drive increased investment demand for gold, following strong ETF outflows. Central bank buying is also anticipated to contribute to bullish gold prices.
Silver (XAGUSD)
While the report from ING Think specifically highlights gold, silver often follows gold’s lead due to its dual nature as both a precious metal and an industrial metal. Given the outlook for gold, silver might also see increased demand, especially with any growth in industrial applications. However, investors should be cautious and consider the volatility and broader economic influences affecting the silver market.
Oil (WTI)
The oil market’s outlook is intricately linked to OPEC+ policies and geopolitical tensions, particularly in the Middle East. With OPEC+ showing a desire to support oil prices, the market might balance in the first half of 2024 before potentially moving into a deficit, which could drive prices higher from current levels. However, risks such as potential escalation in Middle East tensions or stricter enforcement of US sanctions against Iran could significantly tighten the oil market.
CMC Markets suggests that oil and gas may face downside pressure due to various factors including Middle East tensions, the Chinese economic slowdown, and a shift towards clean energy. Notably, natural gas prices experienced a decline in 2023 due to increased production and inventories but could remain elevated in the short term due to seasonal demand.
In conclusion, while there is cautious optimism for commodities in 2024, the outlook remains highly uncertain due to geopolitical risks, global economic conditions, and sector-specific dynamics. Investors in XAUUSD, XAGUSD, and WTI should closely monitor these factors and consider the potential for volatility in these markets.