The intersection of politics and the metal market has become a focal point due to recent geopolitical tensions and upcoming elections, leading to increased regulatory uncertainty for natural resources in certain jurisdictions. Fitch Ratings' latest report highlights the resurgence of geopolitical and political risks in commodities markets, particularly in light of the conflicts in the Middle East and Ukraine. While the geopolitical price premium is expected to persist for most commodities, including oil, gas, copper, and gold, economic growth constraints and ample spare oil capacity may limit significant price rallies.
In 2024, global demand growth for commodities such as oil, copper, and aluminum are likely to weaken, primarily influenced by sluggish global economic growth and China's projected GDP growth of less than 5%. The instability in China's property market has been a contributing factor to this forecast. The overall market balance will largely depend on the supply response, including any production interruptions that may occur. Additionally, it is worth noting that historical data suggests a relationship between presidential elections and gold prices. According to a study by the U.S. Money Reserve, in the two-week periods following a presidential election, Democratic victories saw an average gold price increase of 0.5%, while Republican victories resulted in an average price drop of 1.1%. The impact is even more pronounced during the period between Election Day and Inauguration Day, with Democratic presidential election wins leading to an average gold price increase of 1.5%, while Republican wins brought a 5.5% decrease on average.
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