The gold price breaks one record after another. But many had said goodbye to 2023 and early 2024 - too early. Oil and industrial metals such as copper have also risen in price, thanks to a slightly better economic outlook.
11 April 2024. FRANKFURT (Börse Frankfurt). Commodity prices are currently soaring. The reasons: increasing economic optimism and, in the case of gold, the prospect of falling interest rates. For almost two months now, the price of gold has been on an upward trajectory: on Tuesday this week, gold peaked at USD 2,365 per ounce - the highest it has ever been. In mid-February, it was still less than 2,000 US dollars. A new all-time high was also set in euros. The price of silver has also risen sharply.
This is also reflected in ETC trading: "We are currently focusing a lot on gold and silver ETCs," reports Leo Puschmann, who trades ETFs and ETCs at Lang & Schwarz. Puschmann is seeing a lot of buying, especially for Xetra-Gold (DE000A0S9GB0), but also for multi-leveraged gold and silver price trackers (IE00B8HGT870, IE00B7XD2195, <IE00B2NFTS64>). Gold mining ETFs such as the iShares Gold Producers (IE00B6R52036) and VanEck Junior Gold Miners ETF (IE00BQQP9G91) were also in high demand.
Even higher levels or just a bubble?
The sharp rise in prices has caught some people on the wrong foot. After all, the first few weeks of this year were characterized by outflows from gold ETCs, as was the case throughout the previous year. The negative trend continued in March, as Mobeen Tahir from WisdomTree reports.
Tahir is confident about the further development of the gold price: the price could still fall in the meantime. "However, as soon as the interest rate cuts become a certainty, the gold price could rise to a higher level." Commerzbank, on the other hand, is more skeptical. "Increasingly, the impression of a rational bubble is emerging on the gold market, i.e. a movement that is driven less by fundamental arguments than by the expectation that the price will continue to rise," notes commodities analyst Thu Lan Nguyen.
In addition to Xetra-Gold, other gold ETCs, such as those from Amundi, Invesco, iShares or Xtrackers (DE000A2T5DZ1, DE000A1EK0G3), as well as many silver ETCs such as Xtrackers Physical Silver (DE000A1E0HS6) and WisdomTree Physical Silver (JE00B1VS3333), are currently being traded heavily on Xetra. Xetra-Gold holdings have fallen slightly again and currently stand at 179 tons. At the end of 2023, it was 199 tons, and 231 tons at the end of 2022.
The top ten list of the highest-volume ETCs on Xetra in March is made up almost exclusively of gold and silver price trackers, led by Xetra-Gold, followed by Xtrackers Physical Gold EUR Hedged (DE000A1EK0G3), Invesco Physical Gold (IE00B579F325), Amundi Physical Gold (FR0013416716) and WisdomTree Physical Silver (JE00B1VS3333). The eighth place with the WisdomTree Cocoa 2x Daily Leveraged (JE00B2NFV803), which reflects the cocoa price with leverage 2, is striking. The first industrial metal ETC is only in 18th place, the WisdomTree Copper (GB00B15KXQ89), and the first oil ETC is only in 21st place, the WisdomTree WTI Crude Oil (GB00B15KXV33).
Oil: "Economic optimism and supply risks"
The price of oil has also risen this year and has even reached the USD 90 mark again for a barrel of Brent - for the first time since October 2023. "A mixture of economic optimism and supply risks contributed to this," explains Commerzbank analyst Thu Lan Nguyen.
In Xetra trading, oil price trackers are currently overshadowed by precious metal ETCs. However, Puschmann does see some turnover in oil and gas equity ETFs such as the iShares Oil & Gas Exploration & Production ETF (IE00B6R51Z18>). According to WisdomTree, March was characterized by outflows from oil ETCs. However, Tahir identifies reasons for the price increase: "After the OPEC+ cuts were reaffirmed, global oil markets are likely to be in deficit in the first half of 2024, according to the latest forecasts from the Energy Information Administration."
Change in sentiment for industrial metals
Industrial metal prices have also moved upwards. Copper traded at a peak of almost USD 9,500 at the beginning of the week, its highest level since summer 2022. "There were encouraging signs of a recovery in industrial metals," notes Tahir. He remains optimistic about the long-term outlook for copper - partly due to rising demand as a result of the energy transition. The rising purchasing managers' indices in China are also a positive sign. "In fact, the net inflows of industrial metals indicate a change in sentiment compared to last year." The WisdomTree Copper (GB00B15KXQ89) and the WisdomTree Industrial Metals (GB00B15KYG56) are heavily traded.
By Anna-Maria Borse, 11 April 2024, © Deutsche Börse AG
Anna-Maria Borse is a financial and business editor specializing in the financial market/stock exchange and economic topics.
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