REUTERS — HSBC said Jan. 2 that squeezed supply, improved Chinese demand and the global energy transition will keep commodity prices elevated in 2024 before falling in the following year.
“We forecast commodity prices to rise by an average of two percent in 2024 and fall by four percent in 2025,” HSBC wrote in a note.
The firm expects China’s growth recovery and ongoing supply constraints will keep commodity prices supported this year. It said geopolitical risks and expectations of looser monetary policy in the second half of 2024 will add to the upside, while downside risks include the ongoing slowdown in global growth.
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Cocoa and iron ore prices surged in 2023, while natural gas and coal prices tumbled. Most agricultural products are expected to outperform energy and industrial metals in 2024 amid supply constraints and dry weather.
HSBC projected Brent to average US$82.50 per barrel and U.S. Henry Hub natural gas prices to average $3.75 per million British thermal units.
Crude futures lost more than 10 percent in 2023 during a tumultuous year of trading marked by geopolitical turmoil and concerns about oil output levels of major global producers.
U.S. natural gas futures recorded their biggest percentage fall for the year since 2006, under pressure from record production, ample inventories in storage and relatively mild weather conditions.
HSBC also predicted gold prices will average $1,825 an ounce in 2024, with the first rate cut from the Federal Reserve coming in June.
Gold investors anticipate record high prices this year, when the fundamentals of a dovish pivot in U.S. interest rates, continued geopolitical risk and central bank buying are expected to support the market.
