Commodities: “Strong demand for precious metals”

Gold products are particularly sought after in commodity ETC trading. Chart technicians are also highlighting the potential of the silver price. ETCs on industrial metals that benefit from the measures taken by the Chinese government are also being bought.

October 2, 2024 FRANKFURT (Frankfurt Stock Exchange). The record chase of the gold price has further boosted demand for precious metal products in recent weeks. Global capital flows in commodity ETCs show massive inflows in the segment on a monthly basis. Traders on the Frankfurt Stock Exchange confirm this trend. Ivo Orlemann from ICF Bank reports strong demand for WisdomTree Physical Gold (JE00B1VS3770) and Invesco Physical Gold (IE00B579F325). Gold mining shares are also added to the portfolio via VanEck Gold Miners (IE00BQQP9F84).

Xetra-Gold with new record high

At Lang & Schwarz, Xetra-Gold (DE000A0S9GB0) is particularly sought after, as Fabian Wörndl reports. The bearer bond issued by Deutsche Börse Commodities GmbH and backed 100 percent by gold securitizes a claim to the delivery of physical gold. Xetra-Gold currently holds around 180 tons. At the beginning of the current month, prices reached a new record high of around 78 euros. Meanwhile, Vontobel's clients prefer leveraged knock-out products on the gold price, as David Hartmann reports. The top seller is a turbo call with leverage of 10 (DE000VD88JK0).

Many investors are acting according to the motto “the trend is your friend”, which has paid off in recent weeks and months. Mobeen Tahir from WisdomTree is confident that this will remain the case: “Given the rising expectations of further monetary easing, the upswing in gold is likely to continue,” explains the Director of Macro and Thematic Research. Barbara Lambrecht from Commerzbank is somewhat more cautious. According to the commodities analyst, after the best Q3 performance in over eight years (+13%), “there is a lot to suggest that the highs in gold have come to an end for the time being and that a consolidation phase is now imminent”. Thomas Kulp from DZ Bank also expects this, at least in the short term, although he has raised his 12-month price target for gold to 2,800 dollars: “Permanently low interest rates should support demand for gold - especially from private investors”.

Silver with an intact upward trend

The price of silver is not yet at record levels, but at least it is close to its highs for the year. Jörg Scherer from HSBC points to what he sees as a very promising starting position. The technical analyst speaks of an “absolutely convincing chart trend” after silver marked its highest quarterly closing price since 2012 at USD 31.15 and overcame the highs of 2020 and 2021 at around USD 30. As a result, the price trend of the last four years can be interpreted as a “saucer formation”, from which a price target of USD 42 can be calculated. In the long term, a rise to around 48 dollars is even possible. Investors could use the support levels of 30 and 26 dollars as a “hedge on the downside”. At Vontobel, Hartmann reports good demand for a permanently 15x leveraged factor long warrant on silver (DE000VM9KWG9).

Long speculation on cocoa

Apart from precious metals, prices have also risen in the agricultural commodities segment. Tahir explains this primarily with the covering of short sales on important markets such as soybeans, wheat, coffee, sugar, soybean oil, cocoa, lean hogs and fattening cattle”. The increasing likelihood of a La Niña weather pattern has also triggered fears of drought in some regions and excessive rainfall in others, which could affect agricultural production. He therefore describes the outlook for the sector as positive until the beginning of 2025. This is also the view of some investors. At Lang & Schwarz, Wörndl reports purchases of the moderately leveraged WisdomTree Cocoa 2x Daily Leveraged (JE00B2NFV803).

China's latest policy measures, including interest rate cuts and liquidity injections by the People's Bank of China (PBOC), are providing “much-needed support” to the industrial metals market, according to Wisdom Tree. The measures are aimed at promoting consumption and investor confidence, which has already led to an upturn in demand for industrial metals. In this context, Orlemann reports purchases of WisdomTree Industrial Metals (GB00B15KYG56).