JPM's 2024/2025 Gold and Silver Report Slide Deck

With comments

Contents:

1. JPMs Key Points

2. GoldFix Comments

3. Precious Metals Summary w/slides

4. Base Metals Summary w/slides

5. Full slide-deck

6. PDF

1- JPM’s KEY POINTS

• The combination of weak ex-Chinese demand weighing on rallies and Chinese demand generally supporting the downside has left the broader base metals sector stuck in neutral over 2H23.

• We expect this range-bound paralysis is likely set to continue for a majority of next year before metals prices find firmer footing in 2025 on an emerging recovery in ex-Chinese demand.

• Chinese demand growth, while slowing slightly off strong 2023 levels, is expected to generally remain firm next year, keeping Chinese micro fundamentals supportive on price dips throughout next year.

• Without firm evidence of either a recession (likely necessary for a further capitulation in base metals prices) or ex-Chinese demand recovery (essential for a sustained break higher) emerging, tactically trading the range in aluminum, copper and zinc is likely the best continued strategy.

• Risk in base metals is skewed to the downside around midyear 2024 when we forecast metals prices ebbing towards the low end of recent ranges as the US economy walks a fine line between expansion and contraction.

• When a recovery in ex-Chinese demand eventually comes, it will likely be sharp as restocking amplifies the impulse in physical markets. Near-term demand momentum re-aligning with longer-term bullish trends in base metals could be a potent mix, driving sharp rebounds in pricing, however, we don˖t see this really picking up speed until late-2024 and 2025.

• Across all metals, we have the highest conviction on a bullish mediumterm forecast for both gold and silver over the course of 2024 and into 1H25, though timing an entry will continue to be critical.

• At the moment, gold still appears quite rich vs underlying rates and FX fundamentals and in the near-term gold still looks vulnerable to another modest retreat towards the low $1,900s as Fed rate cut expectations are now running earlier than our forecasts.

• That being said, we would view a retracement in the coming months as an opportunity to begin positioning for our expected breakout rally starting around midyear 2024 as US GDP growth slows markedly, finally solidifying expectations of an imminent cutting cycle to avoid a recession.

• A Fed cutting cycle initially delivering 100bp of cuts over 2H24 is expected to push gold prices to new nominal highs with a targeted peak of $2,300/oz in 2025 while silver pushes above $30/oz.

• While we wait for potential supply adjustments in PGMs, or the reemergence of stronger physical market fundamentals, platinum prices look tied to macro precious metals price drivers for now with a sympathy rally expected over 2H24.

• A major theme across metals in 2024 will likely be cost support and supply curtailments. A cost-driven closure cycle in zinc is already underway but nickel and palladium look prone to be next.