Next year commodities such as oil, gas and iron ore will face “massive challenges” according to Citigroup.
Citing an “abundance” of macroeconomic uncertainties, Citi outlined factors including growth, inflation and the US dollar, alongside lower investment and trade flows that will likely see a shift in demand for commodities in 2023.
In light of European recession, China’s emergence from lockdown and forecast negative growth in the US, the analysts said they were “short-term neutral to bullish” on oil, EU carbon credits, uranium, gold, silver, palladium and iron ore, “but by year-end and beyond” they were bearish for oil, natural gas and iron ore.
Gold was a more exciting prospect, with Citi suggesting it would be “even more bullish” in its view of the metal into the new year.
Also highlighting the energy transition to net-zero and the conclusion of the war in Ukraine, the commodity research team saw longer-term unpredictability for commodities.
Hopeful of China’s post-Covid recovery, Citi said it was bearish towards industrial metals in the short-term, but would likely be bullish in the long-term.