Citi Wealth Insights

Citi analysts are bearish the USD and this could be positive for commodities, particularly precious metals and industrial commodities with high beta to currencies.

Commodities have been broadly delivering positive returns since the end of the 2Q sell-off and positive returns are expected to continue to year-end and through 2021.

After a quiet August and end-of-summer lull, Citi analysts believe gold ETF inflows could surge in September.

Gold spot price recently breached US $2,000/oz and may hit US$2,100/oz this quarter and US$2,300/oz in the next 6-12 months, with risks skewed to the upside.

While commodities are recovering from the depths of the demand shocks that accompanied the rapid global spread of COVID-19 in 2Q, the road to full recovery is likely to remain bumpy.

Gold continues to lead commodities in year-to-date performance, proving to be an outperformer and acting as risk hedge in portfolios. Citi analysts continue to see gold prices trending up in the medium-term. Following a volatile 2Q, crude oil prices may be supported by demand improvements and lower supply.