Uranium prices have been trending higher again, likely, in part, boosted by the raft of recent AI-related news, with OpenAI and others inking a string of deals. While there is substantial doubt that OpenAI could ever meet all the obligations it has been signing, the hyper-scalers are forging ahead with massive data centre plans over the next few years and do have the financial firepower.
Uranium continues to have a bullish technical setup on the charts. Uranium contract prices look to have completed a correction from the highs near $110 pound and rolling correction underway for the past 18 months. The recent advance and breakout above the near-term downtrend at $75 points to upward momentum resuming. We anticipate uranium to retest the 2023 highs near $110 over the coming year.
Unlike previous uranium cycles driven by traditional utility planning, future demand will likely be propelled by inelastic and technologically advanced sectors that require clean, firm, 24/7 power. This dynamic looks supportive of the market’s long-term trajectory and could create a more robust foundation for growth. Further, in an increasingly fractured world, energy security is tightly linked with national security, compelling nations to pivot back to nuclear energy as a stable, sovereign source of power. This has ignited a new era of geopolitical competition in the nuclear sector, with global powers pursuing divergent but equally ambitious expansion plans. The US and China are both forging ahead on this front. Investment options for retail investors include buying individual miners (Paladin Energy) and ETF exposures. We have recommended the Global X Uranium ETF, trading under the ATOM ticker in Australia and URA in the US.
In early September, we noted, “We remain bullish in our technical outlook for ATOM. Encouragingly, the April lows were resoundingly rejected below $12. ATOM has since then managed to make a new record high near $22.50, but remains in a consolidation phase. ATOM has pushed higher towards resistance at the top end of the range in recent weeks, but further consolidation cannot be ruled out. Once overhead resistance is successfully cleared (which is our base case technical outlook), we envision upside momentum resuming and new record highs to follow.”
We remain bullish in our technical outlook for ATOM. Encouragingly, since our last technical update in September, ATOM has since managed to make a new record high above $26.50. The recent breakout above resistance at $26 marks the end of a recent multi-week consolidation and returning upward momentum. We envision upside momentum resuming and new record highs to follow – but buyers should be mindful of elevated risks for a broad-based correction in asset markets. Uranium like other asset classes would unlikely prove to be immune. A correction in financial markets could provide a superior entry point for ATOM.
Uranium stocks diverged: Paladin Energy gained +0.9% and Deep Yellow added +0.5%, while Boss Energy declined -1%.
Carpe Diem
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