Weekly Market Recap (Mar. 28) –Commodities Continue to Rally, with Copper and Gold Taking the Spotlight

Copper and Gold Taking the Spotlight
Published on: Mar 28, 2024

In early to mid-March, industrial metals rallied, with copper and aluminum leading the gains, while the rise in gold garnered the most attention. This was primarily the result of a resonance between the commodity and financial attributes. According to the latest Metal Weekly Report by J.P. Morgan, the sharp increases in gold and copper prices reflect the market’s optimistic expectations for the medium to long-term trends. It’s noted that the support levels for gold and copper are $2150 per ounce and $8500-8600 per ton, respectively.

Commodities generally possess a dual nature of both commodity and financial attributes, and gold and copper are no exception. The commodity attribute determines the direction of price movements, while the financial attribute affects the magnitude of fluctuations, thus acting as an “amplifier” for the commodity attribute.

Earlier this month, Elmer Stewart, the Chairman, President, and CEO of Copper Fox Metals (TSXV: CUU ), reiterated in an interview with “METALS 100” that despite the current market slump and the company’s stock price retracement, the company’s fundamentals and exploration results remain strong, indicating that the stock is undervalued due to market sentiment.

However, in the long term, copper, as a strategic commodity of the future, is expected to have its “shining moment.”

John Ciampaglia, CEO of Sprott Asset Management, recently expressed optimism about copper, stating that the long-lasting and substantial demand related to energy transition will provide long-term support for copper prices. Investor interest in copper is also steadily increasing. The LME copper price has recently shown a rapid upward trend, reaching a high of $9098 per ton on March 15. Short-term catalysts include the unexpected reduction in production by Chinese smelters and downstream policy stimulations, while medium to long-term factors include a decrease in copper production exceeding market expectations.

Goldman Sachs predicts that copper prices are expected to reach $10,000 per ton by the end of this year, and may surpass $12,000 per ton in 2025.

In addition to copper, another metal that Goldman Sachs is bullish on is gold. With the potential for impending rate cuts in the US and Europe, commodities are expected to receive strong cyclical and structural support. It is projected that the return on commodities in 2024 could reach 15%, with gold prices expected to touch $2300 by the end of the year, following its recent breakthrough of $2200, setting a new all-time high.

Marco Roque, President, CEO, and Director of Cassiar Gold Corp. (TSX-V: GLDC; OTCQX: CGLCF) , also recently stated in an interview with “METALS 100” that he believes his company’s stock is undervalued and outlined the catalysts that investors should focus on. Although gold stocks did not follow the rising trend of gold prices during the recent uptrend, investor interest has noticeably increased after the gold price surpassed $2200. Many TSXV gold stocks in Canada also saw movement last week, with the stock price of Awalé Resources Ltd(TSXV:ARIC) doubled.

These developments indicate a promising outlook for both copper and gold in the current market landscape, with favorable prospects for investors and industry stakeholders.

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