(HARVESTING RETURNS FROM COMMODITIES IN 2024)
December 6, 2023
Hello everyone,
In 2024 and 2025, the commodities area that will be a gold mine for investors will be precious metals.
I have been calling for you all to keep scaling into positions in precious metals for the entire year. 2024 will see the metals power up from their present position. And J.P. Morgan agrees.
The firm expects gold prices to hit a targeted peak of $2,300 an ounce.
Why will gold rocket next year?
J.P. Morgan believes slowing U.S. GDP growth will solidify expectations that the Federal Reserve will slash rates to head off a recession, with a cutting cycle equal to 100 basis points in the second half of 2024 pushing gold prices to new nominal highs.
Gold is vulnerable to a retreat toward the $1900 in the coming months, and if this comes to pass, it will set investors up to position themselves for the midyear rally.
Silver will also get a boost. It will push above $30 per ounce on the rate-cutting cycle, according to J.P. Morgan.
We could see a 6% return from precious metals by the end of 2024.
The global economy is expected to slow, but according to J.P. Morgan, it will avoid a recession from 2024 to 2025, which makes it difficult to give a decisive overarching call as to whether commodities as a whole will be bullish or bearish. The bank goes on to say that commodities are unlikely to benefit from inflation next year with core inflation expected to fall to 2.9%.
The price of a barrel of oil is expected to rise according to J.P. Morgan and they see $90 as a target for Brent Crude.
Natural Gas prices on the New York Mercantile Exchange are also forecast to increase according to J.P. Morgan. There will be solid demand growth, though the narrative won’t materialize until the second half of 2024.
J.P. Morgan forecasts the BCOM Energy Index will decline in the first two quarters of next year but deliver an 8% return in the third quarter and ultimately finish out the year with a 10% return.
If we turn our focus to agricultural commodities, we find that the bank has a bullish outlook on sugar with more modest gains across grains, oil seeds, and the cotton market throughout 2024. J.P. Morgan states that the BCOM Agriculture and Livestock Index is forecast to deliver peak returns of 8% in the second and third quarters before declining to 5% at year-end.
Cheers,
Jacquie
