As with most markets, the measures recently adopted by the Chinese Central Bank (PboCh) determine the pace and development of the market. raw materials listednotably those of a metallic nature, which are more linked by their essence to global manufacturing activity.
Therefore, this weekend’s briefing in China – which is expected to announce new support measures to revive a slowing economy by China’s finance minister – could shed more light on Beijing’s fiscal stimulus measures. provide short and long term visibility on the price of the most traded metals on the commodities market.
And the fact is that, even with the losses of the last sessions given the lack of materialization of Chinese stimuli, metal prices have managed to move away from the valuations that analysts make for the following months. Actually, The vast majority of metals are trading above (or very close to) the prices at which analysts estimate they will move at the end of the year and during the first months of 2025.with the exception of Lead and Platinum.
“We see broad headwinds for base metals prices in the final quarter of 2024 due to potential Trump tariffs, weak European growth, slowing US activity, tensions in the Middle East and the weakness of global manufacturing activity,” explains Tom Mulqueen, specialist analyst at Citi.
“It seems premature to express an optimistic view of a rebound in global manufacturing driven by copper or base metals beyond a very short-term rally due to evolving stimulus policy of China, which is why we have maintained our base metals price forecast for the final quarter.” of 2024, generally around current levels,” he says.
“We do not believe that the People’s Bank of China’s real estate stimulus program will be enough to change the outlook for the real estate market. Structural challenges, such as population decline and slowing urbanization, remain dominant and determine the fundamental outlook for industrial metals markets“, contrasts Carsten Menke of Julius Baer, who points out that iron ore and steel are the least valued due to their huge exposure to construction activity in China, and copper, the most valued , due to its weight in demand. of the energy transition.
Investors got ahead of themselves by thinking that The revival of the Chinese economy would result in increased demand for industrial metals such as iron ore and copper and increased consumer demand for luxury goods.
For this reason, uncertainty and disappointment have spread among investors and analysts due to the lack of details and specificity and all eyes are on the future assessments that the Chinese government or central entity will make in the next few days.
“The base metals rally that began in January has faded, repeating a trend observed over the past two years,” they explain from the Bank of America research department. “Investors tend to push prices higher in the first and second quarters, but as physical demand takes time to catch up, industrial metals then give up some of the gains,” they note.
Gold at $3,000 an ounce?
The evolution of gold It remains one of the most watched. Above all, in the heat of increased geopolitical tensions and in anticipation of a possible further escalation which could continue to strengthen its course. “In this context, the demand for safe haven assets is increasing and a climate of risk aversion prevails in the markets. Additionally, the upcoming US presidential election increases uncertainty, which could increase support for gold as investors prepare for unpredictable outcomes,” points out Ruben Ferreira of FlowCommunity.
In this sense, and even if gold purchases are currently too weak to justify a short-term price increase, the Fed’s monetary policy will have a lot to say.
The reductions in the price of silver decided by the American central bank could attract more investors to the market. “We believe gold can reach $3,000 per ounce in the next 12 to 18 months.even if the flows do not justify this price level at the moment. To achieve this, non-commercial demand would need to rebound from current levels, which would require lower interest rates in the United States,” they say from Bank of America.
“Chinese demand for gold could increase depending on the outcome of the US elections in November, and even more so if a new Trump administration imposes high customs duties on imports of Chinese products,” warns Luc Luyet, economist at Pictet WM. .
