00:00So let's start off with copper. Of course, there's so much pent up expectation in terms
00:04of what these tariffs will do. How do you make of the structural fundamentals when it
00:09comes to copper at the moment?
00:13The copper market is actually pretty well supplied compared to past years and compared
00:18to what will happen in the coming years. So there has been very healthy production from
00:25China in terms of refined copper. Chile is doing well as well. And the demand sector
00:31outside of the green revolution and the tech revolution remains weak. So I'm pointing to
00:39the infrastructure and real estate issues in mainland China, which is a major consumer of
00:45copper globally. So in terms of physical fundamentals, the market is still better supplied than before
00:52and where it will be in the future. But at the same time, the sentiment towards copper is
00:59extremely strong. Now, as you mentioned, obviously, there is the strong demand that's coming from the
01:06AI sector. Copper is a significant metal used in physical AI infrastructure. There is the green
01:14energy demand as well. But at the same time, recently, we've had news of the DRC banning exports
01:21of copper concentrates, which will definitely impact sentiment more than the physical markets.
01:29The DRC, despite being a major producer of copper, most of its copper is exported after being refined.
01:37So the ban doesn't really hold a material impact on physical supply.
01:43How much of the drive in terms of its growing with the green transition, AI infrastructure is still at
01:49play here, given a lot of the volatility that we've seen over AI projections at the moment?
01:57Despite the current volatility, producers have been exporting pretty high amounts.
02:04A lot of the AI industry has already stocked up on copper. So prices have already been driven in the
02:13last couple of months.
02:14If you look at metal prices, copper is one of the metals that has benefited significantly and sustainably in the
02:24last couple of months.
02:25They have been on a consistent uptrend despite risks in the U.S. and Iran, between the U.S. and
02:33Iran, geopolitical risk globally, risks towards a global recession.
02:40So copper has benefited despite all of that. And that is really due to the AI and AI demand as
02:47well as green demand.
02:51When it comes to oil, we've had so much to and fro in the price action, right?
02:57Where to from here in terms of how sustained either gains or losses would be, just given how much uncertainty
03:03there still is over the Strait of Hormuz and the broader implications of this conflict?
03:10So oil prices are extremely volatile at the moment.
03:14And prices have averaged around $87 a barrel in the year to be.
03:19At BMI, we forecast prices to come in at an average of $83 a barrel for the whole of this
03:27year.
03:27Now, this is contingent on a number of factors.
03:30So we hold the view that this conflict will be resolved with a preliminary deal by the end of Q3.
03:41So by the end of September, there will be a preliminary deal.
03:45So the probability of that is the highest.
03:48So if that happens, then we do expect Hormuz normalization of at least 30 vehicles, vessels through the Strait of
03:58Hormuz in about 6 to 12 weeks from the announcement of a deal.
04:03Now, there are extremely high risks of an escalation at this point as well.
04:07So it is extremely uncertain.
04:09We see escalation risks to be 35% probability at the moment.
04:17In case of escalation, prices would go beyond $100 a barrel.
04:22And obviously, there would be no normalization in the Strait of Hormuz because that would take 6 to 12 weeks
04:28after any deal.
04:32And of course, this has found effects when it comes to gold as well, right, particularly the higher oil prices,
04:38the expectations from the Fed.
04:40It's been an interesting week for gold.
04:42So much still hinges on what happens to energy supply, right, and how that feeds through to what the Fed
04:48might do.
04:51Yes, exactly.
04:52So gold has always benefited from geopolitical tensions, geopolitical risks.
04:58The world goes into risk mode.
05:00Gold goes up.
05:01But this time, gold has not been able to benefit from that.
05:04And that is really because of higher oil prices as a result of the conflict that has resulted in a
05:10lot of hawkish signaling from the U.S. Fed.
05:13Now, gold being a non-yielding asset would obviously suffer if interest rates went up.
05:21So gold has been under significant pressure.
05:24The U.S. dollar has also been strong this year.
05:27We do expect further upside risks to the U.S. dollar as well to the detriment of gold.
05:33So gold has been capped below a strong overhead resistance of $4,300 an ounce with a very strong support
05:46level still around $4,000 an ounce.
05:49Central bank purchases of gold remain very strong, which is going to be a main driver of upside, if any,
05:58for gold in the coming weeks.
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