BASELINE VIEW PRECIOUS METALS: Gold remains underpinned by the geopolitical tensions brewing in Eastern Europe coupled with the longer-term fears surrounding a sustained period of high inflation globally. The topside has been capped by thoughts of the US Federal Reserve tightening monetary policy, which has boosted US Treasury Yields raising the opportunity cost of holding gold as it generates no yield itself. Longer term investors with a buy and hold strategy will find any levels below $1750.oo/oz attractive entry points to add to gold holdings, while those trading gold from a short term perspective, will find levels approaching $1875.00/oz somewhat stretched.

Palladium continues to outperform Platinum at the start of 2022. The risk for both metals is the threat of an all-out confrontation in Eastern Europe, which will hit global economic sentiment. Investors in these metals are also keeping a close eye on monetary tightening, which can curtail economic dynamism. Consolidation is favoured for now.

BASELINE VIEW INDUSTRIAL METALS: Currently, low inventory levels, Chinese demand, the threat of conflict in Eastern Europe and the potential sanctions that the US is looking to implement against Russia, coupled with tighter monetary policy from the US Federal Reserve, are the major factors driving the Industrial Metals prices. Several country specific idiosyncratic factors, such as copper supply concerns from Peru and mine nationalisation discussions in Chile are impacting prices. While Indonesia’s move to keep nickel at home will keep supply constrained and nickel prices at lofty levels. We see the current levels of base metals as sustainable and do not envisage a wholesale reversal.