Citi Wealth Insights

Commodity prices became a bit frothy two-thirds of the way through Q1, but are generally expected to rebound strongly in Q2 and through year-end.

Citi analysts expect that gold prices could hover between US$1,700-$1,900/oz range for the rest of 2021 and remove their overweight allocation as long-term yields reverse their plunge.

While Citi analysts believe that cyclical factors point to a strong metals price rebound for some time, this may not necessarily point to an overall commodity super-cycle.

The outlook across most commodities looks robust for 2021, with enough vaccines likely to be available by mid-year to facilitate a further rebound in global growth.

2020 has been among the most volatile years for commodities, yet the basic picture for 2021 looks better. The current gold bull market could slow but not end provided the Federal Reserve’s monetary policy stays accommodative and Citi analysts see gold prices averaging US$1,900/oz in 2021.

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