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BMI, a unit of Fitch Solutions, Thursday upped its 2024 gold price forecast to $2,250/oz from $2,100/oz, with a ‘neutral’ view towards gold in H2, as prices remain tangled in a tug of war between a less dovish Federal Reserve and high levels of geopolitical tension.
The brokerage expects prices to trade within the range of $2,150/oz-$2,350/oz in the coming months.
Despite its neutral stance, BMI said, H2 2024 brings “strong downside risks to gold, especially if the U.S. Fed does not cut rates from September, and if the U.S. dollar breaks out significantly to the upside.”
In the longer term, it expects gold prices to remain elevated in the coming years compared to pre-Covid levels.
Citi in April forecast gold prices to hit $3,000/oz over the next 6–18 months, while Goldman Sachs analysts last month said prices could rebound to ~$2,700/oz by year-end in a base case scenario.
Spot gold (XAUUSD:CUR) up +0.62% at $2,312.63 an ounce on the day, has advanced 12% so far this year. Prices, however, are set for a second weekly decline if losses hold, as traders await a key inflation data following recent hawkish comments from central bank officials.
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Turning to lithium, BMI expects prices to remain under pressure in 2024-2025, below 2022–2023 highs, owing to a rapidly expanding global lithium supply that has pushed the lithium market into surplus.
It forecasts Mainland Chinese lithium carbonate 99.5% to average $15,500/tonne in 2024 and $20,000/tonne in 2025 compared to $72,081/tonne in 2022 and $35,956/tonne in 2023. Mainland Chinese lithium hydroxide monohydrate 56.5% is likely to average $14,000/tonne in 2024 and $20,500/tonne in 2025 compared to $69,496/tonne in 2022 and $38,324/tonne in 2023.
In the longer term, lithium prices are likely to be impacted by innovations in battery chemistries, including the adoption of batteries either without lithium or those that require a reduced amount of lithium, BMI said in its outlook for lithium prices.
Although elevated demand for lithium chemicals for use in electric vehicle batteries and energy storage systems is expected to support prices around current levels in the short term, the increase in lithium supply by major and emerging players, is expected to cap further price growth.
“Additionally, faster-than-anticipated advancement in battery recycling technology presents downside risks to lithium prices by significantly expanding sustainable lithium supply,” the brokerage added.
Potentially relevant stocks include Albemarle (ALB), Sociedad Quimica y Minera (SQM), Arcadium Lithium (ALTM), Piedmont Lithium (PLL), Lithium Americas (LAC), Standard Lithium (SLI), Sigma Lithium (SGML), Ioneer (IONR).
ETF (NYSEARCA:LIT)