Safe haven in demand

Gold’s recent volatility stemmed from the US NFP and ISM Services PMI reports out in the first week of 2024. Higher-than-expected NFP figures drove XAU/USD down to $2,025, while the PMI signified a slowdown in US service activity for December. Gold’s prior surge is tied to anticipated rate cuts in 2024. It could find substantial backing when these policies take effect. Gold is also regarded as a safe haven in times of uncertainty and economic upheavals. A possible bullish trend may persist if markets anticipate these shifts.

Industrial silver to take flight

Reduced borrowing costs for manufacturers, propelled by Fed’s rate cuts, could ignite industrial activity, fostering increased demand for silver, a critical component in electronics, solar panels, and various industrial applications, including the burgeoning electric vehicle (EV) industry.

EV and infrastructure demand to boost economies

Global demand for electric vehicles (EVs) continues to surge, propelling a substantial need for infrastructure development worldwide. This shift sparks a profound impact on industrial equities and metals. Companies involved in EV manufacturing, renewable energy, and infrastructure development will witness heightened investor interest, boosting industrial equities. The growing demand for EVs as well as governments prioritizing sustainable initiatives can drive a surge in industrial metal prices, particularly those essential for battery production, such as lithium, cobalt and nickel. Increased demand for these metals will benefit mining and refining sectors and also positively impact global supply chains and related ecosystems.

Conclusion

The prospect of a 2024 Fed rate-cut trilogy holds immense potential to seek safe haven at lofty valuations as well as augment the financial strength of metals and mining sector and unlock the demand for industrial metals to play a pivotal role within the burgeoning electric vehicle industry. Rate cuts by the Fed can only dissipate the uncertainty surrounding the metals and mining sector and unlock huge demand for industrials.

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