UBS: Buy gold below 2,300 at will, and increase your position on copper when it falls

Golden10 Data ·  May 29 10:23

Source: Golden Ten Data
Author: Xiao Yanyan

UBS pointed out that there is still room for gold, crude oil and copper to rise, and commodity gains are unabated.

UBS Global Wealth Management (UBS Global Wealth Management) believes that there is still room for commodity prices to rebound, and rising demand for crude oil and copper and increasing supply shortages may provide good support for prices in the next 6 to 12 months.

A team of analysts led by Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, said in a report on Tuesday: “We have always believed that commodities such as crude oil and gold are still potential geopolitical hedging tools. More specifically, we are optimistic about the yield strategies for gold and crude oil, and suggest opening a good position for the further rise in copper.”

Commodities dominated in 2024, with gold, silver, and copper prices reaching historic highs, while crude oil remained volatile due to geopolitical conflicts.

The UBS CMCI Composite Index has risen nearly 11% so far this year, and Marcelli and her team expect the commodity index to rise 10% in the next 6 to 12 months.

Crude oil futures climbed Tuesday as OPEC+ is expected to extend voluntary production cuts into the third quarter on June 2. Marcelli and his team said, “OPEC's crude oil exports in the first 19 days of May were the lowest since August 2023, and compliance with the OPEC+ production reduction agreement is still very important.”

Copper prices hit a record high last week, and supply shortages will keep the copper market tight. Copper prices have been soaring since the beginning of this year, as concerns about the US recession have abated amid a recovery in the labor market and positive corporate profits. Furthermore, China's economy, which accounts for 50% of global copper consumption, is showing signs of recovery, boosting demand for this industrial metal.

UBS analysts say that the tight situation in the physical market should continue to drive the price of copper up.

“Little progress has been made in addressing copper supply challenges, and China's renewed emphasis on stable housing policies should support investors' interest,” Marcelli and her team said.

According to UBS Global Wealth Management's latest copper supply and demand estimates, there will be a gap of about 390,000 tons this year and 2025. The analyst said, “We recommend investors continue to go long on copper and increase their positions on dips.”

Central bank demand is expected to further boost the price of gold. UBS analysts said that the gold buying behavior of central banks around the world will allow gold to maintain good support for the rest of 2024, while the safe-haven demand for gold will remain “healthy” in the face of political uncertainty such as the Middle East. At the same time, the Fed's easing cycle, which may begin later this year, will also drive more capital into gold ETFs.

Marcelli and her team recently raised their year-end gold price forecast to $2,600 per ounce and advised investors to buy on dips of $2,300 per ounce or less.


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