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AYT Copper & Gold in the Pilbara

Investors see copper as the top asset for 2024, with gold in second place; interest in critical metals cools at BMO’s Global Metals, Mining & Critical Minerals Conference

(***** News) - Investment sentiment in the commodity space is seeing a slight shift as investors pay more attention to copper and less to battery metals; meanwhile, gold and silver continue to plod along, according to the latest comments from analysts at BMO Capital Markets.

The Canadian Bank just wrapped up its 33rd annual Global Metals, Mining & Critical Minerals Conference, and according to attendee surveys, copper was the metal with the most potential for 2024.

“We did sense some signs of investor fatigue in waiting for 2024 copper price upside, though most agree that supply-side issues have changed underlying market expectations for this year. In our view, the potential benefit from global grid upgrade spending is appreciated. Interestingly, interest is already starting to shift towards whether modeled supply recovery could underwhelm in 2025,” the analysts said.

BMO specifically asked attendees what commodity they would hold for the next five years. According to the results, 62% of those surveyed said they would hold copper, slightly down compared to 2023 answers.

Gold was the second most popular asset, with 22% of those surveyed saying it was their long-term asset of choice.

Gold is becoming slightly more attractive for investors; the bank said that last year, only 10% of those surveyed said they would hold the precious metal in the long term.

Only 13% of attendees said they would hold lithium, and 2% would hold iron, which is relatively unchanged from last year.

BMO also noted a surprising shift in the marketplace as investor interest in critical and battery metals dropped at this year’s conference. Last year was the first year the conference dedicated specific space to this sector and speculated that it was a significant factor for record attendance.

“Compared to last year, when lithium, nickel, and critical minerals presentations were standing room only, it is fair to say there was less investor interest in 2024 (and less OEMs in attendance). However, we would say investors are now looking towards a price floor in underperforming battery materials, though many suggest we are not quite there yet,” the analysts said.

Although investors see value in holding gold, they are relatively neutral on the price. BMO said that 50% of attendees see gold prices trading between $1,950 an ounce and $2,150 an ounce; at the same time, 32% of those surveyed were more bullish on the metal, seeing a price range between $2,150 and $2,350 an ounce.

“Interestingly, 11% of attendees expect gold prices to accelerate further this year by opting for a gold price of >$2,350 by year-end,” the analysts said.

BMO analysts said they were also surprised by investors' views on what is driving the gold market. They noted a significant focus on the U.S. dollar and interest rates and very little attention being paid to central bank demand.

“In our view, the historical correlation of gold to real rates is now broken and we see the current view held by attendees at the event to be somewhat outdated,” the analysts said. “We view Chinese consumer demand as the underappreciated driver for gold and expect emerging market central bank net buying to be a quasi-annuity for gold over the coming decade.”