In contrast, the energy sector has seen a downturn, with prices slipping as OPEC and the IEA reduced their global demand forecasts for both this year and next.
While precious metals are leading the pack, industrial metals show mixed performance. Copper, aluminium, and zinc are gaining, whereas steel, nickel, and iron ore have declined year-on-year.
For insights into where these commodity prices might head in the coming year, CNBC-TV18 spoke with industry experts, including Kishore Narne, Head of Commodity & Currency at Motilal Oswal; Ajay Kedia, Director of Kedia Commodities; Pranav Mer, VP of EBG — Commodity & Currency at JM Financial Services; and Ole Hansen, Head of Commodities at Saxo Bank.
Edited excerpt from the discussion.
Q: It’s all about the international markets when it comes to commodities. Going forward, it’s going to be important to see who the next US President is, and that would be 10 days away from now. Would you say the commodities as a sector, especially gold, has factored that in?
Hansen: The market has priced in a lot, I think, at this point in time. We saw last week how the rally was driven by the worries that we might have a red sweep, basically that the Republicans will control both the White House and the Congress. That will obviously leave the road open for some of the policies to be implemented. And what strikes me with these is that they will all lead to higher debt. And that was really one of the reasons why we just recently saw both yields, the dollar rise, and gold rise at the same time. So, for now, we are pricing in some uncertainty after the US election. We may see some profit-taking as the initial reaction. But I think overall, the reason why gold is up more than 30% and silver nearly 40%. The reasons behind that have not gone away. And I think they’re going to stick around for a while. And that’s why we maintain an overall long-term bullish view on these two metals.
Q: What’s your sense between gold and silver, what would you still look to buy? The last 12 months have been very bullish. And I remember you telling us that ₹1,00,000 per kg in silver is a matter of time. From here, are you more bullish? What kind of returns are you anticipating, especially for silver, in the next one year?
Narne: We’re more bullish after our initial target is now achieved. So, we have revised our target to ₹1,25,000 per kg. So roughly translates to around $42-43 per kg. So there are forecasts anywhere between $38-50 per kg in the world now. So, I don’t deny that $50 per kg is not possible. So that could be a possibility. So that will take us to around ₹1,48,000. But having said that, the only uncertainty at this point in time is the US election and how it’s going to pan out. And that’s where the gold can get its cues from. But I think silver will still continue to be an outperformer. So, we are bullish on gold and silver both. On gold, we have revised our targets to $2,850 per ounce. The most bullish case is around $3,000 per ounce. But in silver, $42-43 per kg is the base case scenario for us and the bullish case is probably around $47-48 per kg.
Q: Before we reach those kinds of levels, are you anticipating a correction? If yes, then up to what levels?
Narne: I think corrections are an integral part of this rally. We have seen those corrections coming up, and at times, it’s very, very short-lived. Global liquidity is something which is causing these things, both in equity markets as well as in commodity markets. The corrections are nowadays, just a matter of days. And by the time you realise the markets are again back to all time high. So that’s something very different phenomenon. I think corrections as possible. So yes, if you are a very long-term investor, or maybe you’re looking at a year or plus or so in silver, probably any day when it’s down by 5-8%, it’s a good time to pick up silver. But I don’t think there will be a sustained quarter of correction or something like that. So, it will be a mere few days of volatility.
Q: What is your sense? I remember when we started 2024, and you said in 2024, $2,400 per ounce for gold is what you were looking at at that point in time. $2,400 has come and gone, and how. We are very close to $2,800 now. Are you looking at a correction from these levels? Are you buying on dips? And what are your targets now for 2025?
Kedia: The rally, what we have seen in the last year, was a fabulous rally. We have never seen this type of movement. ETF buying is one of the newest thing we can see because now everyone is running out of gold and saying we have to buy bullion, silver and everything. So, I think for 2025, we are bullish. But I think prices would be more volatile in 2025, given geopolitical tensions and the interest rate cuts. In the best case, we would see prices moving towards$3,000-3050 or near to $3,100 level. But the second half is going to be a little bit corrective mode. Again, we may see a level like $2,400 in international markets.
But we are more bullish on silver rather than gold and have a target price of $70 per kg in the next three years.
Watch the accompanying video for the entire discussion.