Read: Why consumers will be paying a lot more for natural gas this winter Lost nearly 40% in the fourth quarter, but they are still ready to post a yearly rise of 49% on the back of strong liquefied natural gas demand from Europe and Asia, curtailed flows from Russia to the European Union, and “restrained” U.S. In the energy market, natural-gas futures “We see upside if gold stays at current prices and tremendous upside should gold increase” to our fair price estimates.Īlso see: Platinum, palladium buck an overall upward trend for commodities, poised for hefty 2021 losses Energy rally Gold is among the commodities trading below “where the long-run fundamentals suggest they should trade,” says McKenna, adding that Kopernik estimates gold’s “fair” price at around $2,000. Even though commodities, with the exception of precious metals, have been performing well, mining companies are “still shunned by the market,” he says. Meanwhile, Taylor McKenna, analyst at Kopernik Global Investors, points out that gold’s decline this year comes despite the highest inflation in decades, and the market has not seen major new gold mines being built for many years. Federal Reserve said it would phase out its bond-buying stimulus program sooner than previously planned, and suggested three interest-rate hikes next year as it moves to fight high inflation. “With inflation remaining stickier than the Fed had hoped, any loss of confidence in growth prospects could be very bullish for gold.” Gold’s performance in 2022 will depend largely on how the omicron variant affects the global economy and trade, says Geetesh Bhardwaj, director of research at SummerHaven Investment Management. Read The tale of two metals: why copper and silver have taken split paths this year Traded more than 6% lower this year, while silver “As global central banks have begun to tighten, it has caused gold to underperform as real yields have increased,” says Dixon. Index is down nearly 7%, defying the upward trend among the other S&P GSCI subindexes this year. This led to higher prices and many of the “favorable factors” that contributed to the rally “such as inflation, supply-constrained physical markets, commodity-intensive infrastructure spending, rising production costs, and the ongoing transition to a lower carbon economy are expected to persist, and in some cases, accelerate in 2022,” he says. In general for the commodities that saw the biggest gains this year, low inventories and reduced capital expenditures led to concerns as to whether supply will be “adequate to match resurgent demand,” says Eliot Geller, partner at CoreCommodity Management. S&P GSCI subindexes for industrial metals Leading the rise, the S&P GSCI Energy index Commodities “once again proved their value” this year, and demand “appears to be growing for almost all commodity markets, while supply is structurally constrained across the board,” says Hakan Kaya, senior portfolio manager at Neuberger Berman.
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