Bank of America 2024 commodities outlook

Bank of America Merryl Lynch has set ambitious price targets for various commodities in 2024, anticipating a positive turn in the market after a challenging 2023. The institution forecasts a price of $90 per barrel of Brent crude, a surge to $2400 per tonne for gold if the Fed implements cuts in the first quarter of the year, and anticipates copper and aluminum reaching $10,500 per tonne and $3000 per tonne respectively. Michael Widmer, Head of Metals Research at Bank of America, highlighted the potential impact of rate cuts on commodity markets. He stated that while rate increases had acted as a headwind to commodities in 2023, a reversal in monetary policy could bolster commodity prices in 2024. Widmer acknowledged the discrepancy between the Fed's guidance and the market's expectations, noting that the convergence of these factors could introduce volatility in the market. Widmer elaborated on the significance of the Fed's stance on rate cuts, mentioning that market dynamics and the Fed's response would be instrumental in determining the future trajectory of commodity prices. He emphasized that the alleviation of macroeconomic headwinds in 2024 would likely support commodity prices. Turning to the specific commodity outlook, Widmer addressed the factors influencing the price targets. Regarding Brent Crude, he underscored the importance of OPEC's role in stabilizing prices and speculated that the organization's actions might drive the price to $90 per barrel. Additionally, he assessed the impact of regional conflicts on oil prices, positing that unless these conflicts escalated, the effect on oil prices would likely be limited. Discussing the outlook for gold, Widmer emphasized the central role of rate cuts and the US dollar in driving prices upwards. He highlighted increased central bank gold buying, driven by de-dollarization efforts, as a key factor supporting gold prices. Widmer also suggested that geopolitical tensions and shifting U.S. fiscal priorities could further boost gold prices, positioning the precious metal as both a macroeconomic and geopolitical hedge. In summary, Bank of America's optimistic projections for 2024 paint a promising picture for commodities, with the potential for price increases across various sectors. While acknowledging the complexities and uncertainties in the market, the institution remains bullish on the outlook for commodities in the coming year. Disclaimer: The opinions and forecasts expressed in this article are those of Bank of America and do not reflect the views of CNBC Africa.