Samantha Dart on Gold Rally, European Natural Gas, and Oil Outlook

Gold as a Reserve Diversification

• 🥇 Gold is presented as a high-conviction trade for 2026, with expectations of significant price gains.
• 🏦 A primary driver for the rally since 2022 has been incremental central bank buying, particularly from emerging markets, as a diversification of reserves following the freezing of Russian assets.
• ⚖️ This trend is supported by supply constraints, where increased demand competes for a limited amount of physical gold, thus supporting prices.
• 📈 This year, the rally is further bolstered by ETF positioning, which is also physically backed, increasing competition for bullion.
• 🌍 The rally is not primarily an inflation hedge, but rather a strategic move by central banks for reserve diversification, with countries like China holding a lower percentage of gold in reserves compared to developed nations.

European Natural Gas Outlook

• 📉 A high-conviction trade is shorting long-dated European natural gas.
• 🌍 Europe has been diversifying its natural gas imports away from Russia, which curtailed supply in 2022.
• 🏭 Global liquefied natural gas (LNG) supply is expected to see tremendous growth over the next seven years, starting in 2025.
• 💰 This increasing global supply is anticipated to make gas cheaper and more accessible for Europe, putting downward pressure on prices.
• 🕊️ A peace deal between Russia and Ukraine could further soften the gas balance, potentially accelerating and deepening the price decline.

Oil Market Projections

• 🇻🇪 The base case for Venezuela's oil production is status quo, with current production around 900,000 barrels per day.
• 📉 Some sell-off in the back end of the oil curve has been attributed to potential future supply changes from events like regime changes in Venezuela or peace deals in Russia, though this is not the base case.
• 📈 Goldman Sachs expects WTI to average $52 a barrel next year.
• 🇧🇷 🇬🇾 This bearish call on oil is supported by significant supply increases from non-OPEC+ sources, particularly from projects in Brazil and Guyana that were delayed during the pandemic but are now coming online.