Gold is going up!
Let's consider the most important events in the commodity markets that will shape medium-term and long-term trends this week.
Japan Reboots Nuclear Energy
The Land of the Rising Sun suspended the operation of all its nuclear power plants after the Fukushima accident on March 11, 2011, but capacities are gradually being restored. According to forecasts, nuclear energy production in 2024 will increase by 20% compared to 2023. One by one, the country is restarting its nuclear reactors.
The shift in energy development will, on one hand, increase demand for uranium, although the commodity has already increased in price by 84% over 12 months. On the other hand, Japan will now need less liquefied natural gas, which is not very profitable for producers. This news will have a positive impact on the quotes of Kazatomprom #KAP and Cameco (#CCJ).
On the flip side, the increased role of nuclear energy in Japan's economy creates uncertainty in revenue for companies such as Novatek #NVTK, ExxonMobil #XOM, Shell #SHEL, and others.
Uncertainty in the Red Sea Pushes Gold Higher
The price of gold has risen by 3% over the last week, reaching $2,179. The upward trend in the asset is supported by active purchases from global central banks and expectations that the Fed will cut rates by 0.75% in 2024.
The forecast of a Fed rate cut is already leading to a decline in the Dollar Index #DXY and a reduction in U.S. bond yields, as seen in the chart for the last 3 months below.
With Yemeni Houthis continuing attacks on trade and military vessels in the Red Sea, demand for gold is naturally fueled. Investors are moving away from risk towards safer assets, which has a positive effect on the shares of gold mining companies. Their reports for the first quarter of 2024 are likely to exceed expectations.
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