Bank of America ratchets up gold and copper forecasts, gives the best stocks to play the trend

Published Tue, Apr 9 202412:01 PM EDTUpdated Tue, Apr 9 202412:39 PM EDT

Bank of America says a more bullish outlook for gold and copper could benefit a handful of stocks. The firm increased its outlook for commodities in a Tuesday note, upping its year-end gold forecast to $2,317 per ounce, or a roughly 17% increase moving forward. Bank of America also sees copper climbing 8% in 2024 to $9,321 per metric ton. Indeed, on Tuesday, gold futures for June delivery hit a fresh record, while the copper contract for May touched its highest level since January 2023. "Tight copper mine supply is increasingly constraining refined production and copper demand is steady, driven by energy transition tail winds," Bank of America analyst Lawson Winder said. For gold, the analyst says prices will move higher due to a confluence of factors, including central bank monetary policy, a robust appetite for bullion from Chinese investors and bets from Western investors on when the Federal Reserve will cut interest rates. To play its bullish outlook for copper and gold, the firm also named a slate of stocks that could see a boost. Bank of America's top gold pick for the year is Agnico Eagle Mines . The firm reiterated a buy rating on Tuesday, with a price target of $85 per share, implying 39% upside from Monday's close. U.S.-traded shares have climbed 13% in 2024. AEM YTD mountain Agnico Eagle Mines stock. "North American gold producers have traded between 1 and 2 times NAV [net asset value] with 1.75-2.0 times being accorded to the organically growth-oriented gold producers such as AEM," Winder said. Bank of America raised its rating on mining stock Freeport-McMoRan to buy, citing "high quality copper leverage, robust and rising free cash flow, and material gold revenue," the latter of which the firm estimates is 15% of total revenue. The firm has a $59 per share price target on Freeport-McMoRan, suggesting 18% upside. The stock has added nearly 20% in 2024. FCX YTD mountain Freeport-McMoRan stock. Bank of America highlighted Freeport-McMoRan's "stable production profile, low unit costs and [an] improving balance sheet" as drivers behind its price target.