Resumption of industrial metals? Still positive on gold

Russia has announced a temporary reduction in exports of enriched uranium to the United States. This could pose problems for recent plans to reopen nuclear reactors linked to growing demand from Big Tech. This decision follows a US law signed by Joe Biden in May banning imports of Russian enriched uranium until 2040, with exceptions until 2028.

Last Friday, the price of aluminum jumped 8% following the Chinese announcement of a removal of export subsidies for aluminum, copper and vegetable and animal oils, biofuels, from December 1 . China is the world's largest exporter of metals. This initiative should increase the purchase price for importing countries, in particular the United States, Japan and South Korea. Aluminum and copper are key materials for the manufacturing, automotive and construction industries. Europe imports 50% of its biofuels from China.

For analysts, these two movements could come against a backdrop of future trade tensions between Trump and China and a demonstration of Chinese power in industrial metals exports. China accounts for 50% of global aluminum production and few countries are capable of increasing their production. China also wants to reduce the risk of inventories being too low in the event of an economic downturn, particularly in copper, aluminum, nickel, zinc and oils.

For a recovery in the metals cycle, the positive factors are there with reindustrialization, US infrastructure programs, the energy transition and electrification, and the sharp increase in defense orders, but the triggering factor will be the conviction of an economic and real estate recovery in China. We're not there yet. For 3 years, the structural trend in industrial metals has been bearish.

The price of gold has a habit of falling immediately after US presidential elections, as investors favor risky assets. This decline was reinforced by increases in the dollar and the US 10-year bond, and the sharp rise in the price of bitcoin, a cryptocurrency which is sometimes an alternative to gold and currently benefiting from a future pro-bitcoin US government. Investors also fear Donald Trump's inflationary economic policy which could result in an increase in interest rates, unfavorable for gold. This is gold's worst performance in the last 13 presidential elections. Donald Trump's clear victory has removed all political uncertainties in the United States.

Last week, gold experienced its biggest weekly decline in 3 years. The upward trend should resume, rather in 1Q25, with a first target of $3,000. Economic and geopolitical uncertainties in a chaotic world, purchases by emerging central banks and budget deficits are positive factors for holding gold in the medium term. The other technical points favorable for returning to gold are an overbought dollar and oversold US bonds.

In industrial metals, China remains the main stock market factor. We are awaiting confirmation of a Chinese economic recovery. We buy gold when prices fall. Our goal remains above $3,000 in 2025.