Head of Commodity Strategy
This past week, we saw a justified meltdown in risky assets as markets absorbed the blow of Trump’s far larger than expected tariffs on all its major counterparts, sparking threats of retaliation and a broad selloff around the world on concerns that a global trade war on this scale and magnitude will drive an economic slowdown—not least in the US, where inflation forecasts have spiked, and sentiment among consumers and businesses has fallen sharply during the past couple of months.
There is a general understanding of why Trump wants to reshape the global economy, with his primary goal being the reversal of a two-decade trend of US companies moving production overseas—especially to Asia—to capitalise on cheaper labour costs, which, in turn, has boosted their stock prices but contributed to domestic job losses and economic stagnation in certain sectors and parts of the nation. This shift has had significant impacts on American manufacturing and the broader economy, as well as its ability to be self-sufficient in key materials.
What Trump delivered on this so-called "Liberation Day" was an economic war declaration likely to cause chaos across global supply chains, while in the short term raising the risk of an economic fallout, hurting demand for key commodities, with energy and industrial metals being the sectors most at risk. While stock markets crumbled, investors sought shelter in secure government bonds, and for a change not in the US dollar, which normally acts as the go-to currency during times of heightened uncertainty. Instead, the euro, yen, and especially the Swiss franc have served as safe havens, while the US dollar weakened broadly. The narrative driving the US dollar lower is one of reduced portfolio allocations to the US as the policy will bring most disruption to the US economy in the near term.
The Bloomberg Commodity Total Return Index (BCOM) trades down 4% on the week, and following a brutal week the annual gain has been cut in half. As per the table below, the growth- and demand-dependent sectors of energy and industrial metals suffered the steepest losses; the precious metal loss was limited by gold’s resilience while the agriculture sector traded mixed to lower.
On an individual level, major losses were recorded in crude oil and refined products, copper, silver, and cotton, while a handful of different commodities barely scraped even, led by natural gas, gold, corn, sugar, and not least wheat, the best performer benefiting from a weaker dollar.
Gold’s safe-haven role temporarily received a setback with spiking volatility driving another burst of deleveraging similar to, but so far nowhere near the same scale seen during the early stages of pandemic panic back in 2020 when gold over a ten-day period slumped by 13% before recovering strongly as inflation worries and stimulus helped create fresh demand. Gold prices hit a record high on Thursday before the mentioned deleveraging helped drive a USD 100 correction.
However, the combination of heightened global economic tensions, the risk of stagflation, a weaker dollar combined with collapsing US real yields as nominal yields fall and inflation expectations rise, will in our opinion continue to support bullion, and we maintain our forecast for gold reaching USD 3,300 this year. Adding to this a market that is now aggressively positioning for the Fed to deliver more cuts this year—at current count a full 100 basis points of easing by year end. The recent transfer of gold from around the world to US warehouses monitored by the COMEX futures exchange in order to get supplies behind a potential tariff wall may now see a part reversal after bullion was made exempt, potentially weighing on prices in the short term.
Gold’s correction from a fresh record has once again been relatively shallow with several key levels of support yet to be challenged. The most important in our opinion being an area around USD 2,950 which apart from being the February top also represents a 0.382 Fibonacci retracement of the run-up from late December. A rejection before and at this level would signal a very weak correction within a strong uptrend.
Silver, meanwhile, was heading for an 8% weekly slump, with most of the damage being inflicted by economic growth concerns as silver derives around 50% of its demand from industrial applications. The weakness was led by selling in the New York futures market after a fact sheet distributed by the White House stated that bullion (gold) and "other certain minerals that are not available in the United States" should not be subject to reciprocal tariffs.
With silver and platinum imports accounting for the bulk of US consumption, traders concluded that these two metals would not be impacted, and with that, the tariff premium on futures prices in New York compared with spot prices in London collapsed, hurting an already weakened sentiment. A 51% year-to-date increase in silver flows to COMEX-monitored vaults now faces the risk of a partial reversal, potentially adding supply to a market already weakened by short-term recession concerns.
In addition, prices were hurt by a collapse in the COMEX futures premium on speculation silver, just like bullion, would be exempt from tariffs after a fact sheet from the White House potentially hurting industrial demand which accounts for around 50% of silver’s total demand. Thursday’s slump most certainly qualified for its worst since December 2023, driven by a double whammy of economic worries hurting its industrious credentials, and not least a complete deflation of the COMEX futures premium after a fact sheet provided by the White House raised doubts about silver being included in tariffs.
Silver’s dramatic slump extended into Friday’s session, and with gold holding steady around USD 3,100, supported by the dollar and yield slump, the gold-silver ratio has surged above 100 ounces of silver to one ounce of gold, the highest since 2020, potentially offering some relative value once the dust from this latest setback settles. In the short term, traders will focus on support just below USD 31, where we find the 0.618 retracement of the run-up since late December, as well as the 200-DMA and trendline from February last year.
Crude oil, meanwhile, was heading for its worst week in a year, with Brent crude tumbling more than 11%, in the process slumping through previous strong support in the USD 68 area. China’s aggressive countermove to US tariffs, announcing their own 34% duties on US goods, with Europe likely to follow soon, all but confirms we are heading towards a global trade war—a war that has no winners, and which will hurt economic growth and, with that, demand for key commodities such as crude oil and refined products. At this stage, we have not only entered a demand destruction phase, but also supply destruction from high-cost producers, which over time will help cushion the fall.
The weakness was further accelerated by an OPEC+ surprise decision to accelerate planned production hikes starting in May. To understand this strategy, it’s crucial to examine the WTI forward curve, which is showing prices below USD 60 from next January and onwards. A recent Dallas Fed survey of US producers revealed that an average price of USD 65 is needed to profitably drill a new well. With crude oil prices under pressure, US production risks stalling sooner than anticipated, potentially allowing key OPEC+ members to regain lost market share.
Partly or potentially fully offsetting this production increase are the impacts of sanctions and tariffs on countries like Venezuela, Iran, and Russia. These nations may struggle to maintain production in the coming months, providing an opportunity for GCC producers, particularly Saudi Arabia, the UAE, and Kuwait, to increase output and reclaim market share both within OPEC and globally.
The New York-traded High Grade copper futures reached a record closing high on Thursday at USD 5.1120 a pound, marking a culmination of a month-long surge that has triggered a major dislocation between US prices and the rest of the world. A development driven, not by strong fundamental demand, but mostly by a phenomenal arbitrage window that has been opened due to Trump’s push for tariffs on imports of the metal.
Ahead of a potential announcement of tariffs, a decision that could still be months away given the time an investigation carried out under Section 232 of the Trade Expansion Act normally takes, traders have been rushing copper to the US in order to log in premiums of up to 13% relative to prices in London, a move that has helped tighten the rest of the world where more than 90% of global demand is consumed. It’s worth noting that holding a high-grade futures position at a 13% premium to London has raised binary risks in the market, meaning prices could suddenly drop by more than 10% if no tariffs are introduced or surge even higher if the level is 25%, in line with those applied on steel and aluminum.
Crude prices have settled into a relatively tight range near the recent lows, weighed down by fears Trump’s aggressive trade policies may trigger a global trade war that would negatively impact global growth and demand. In addition, the prospect of rising supply from OPEC+ next month has also been weighing on prices at a time when the US administration has been talking down oil prices, potentially, if successful, scoring a major own goal.
We believe these concerns are overstated, not least considering the risk of lower output due to sanctions and several of the OPEC+ members having pledged additional cutbacks to compensate for exceeding quotas, a move that if carried out would offset the planned increase. Iran is once again in the crosshairs of the US administration after Treasury Secretary Scott Bessent recently said the US would ramp up sanctions on Iran, a producer that despite sanctions in the past four years managed to increase production by around 1.1 million barrels a day. A clear sign of that threat was seen this week when the US penalised a Chinese refinery and its CEO for allegedly buying Iranian oil.
With this in mind, we see no major change in OPEC+ production in the coming months, instead a redistribution among its members with GCC producers being the main winners, allowing them to increase production without hurting prices. In addition, it has become increasingly clear that Trump’s “Drill, baby, drill” cannot be achieved without hurting output from high-cost producers, many of which are located in the US, and production growth will likely slow, thereby supporting prices while handing market share back to OPEC.
Recent commodity articles:
3 April 2025: Tariff-related recession fears ignite widespread commodities selloff
2 April 2025: Commodity Outlook: Commodities rally despite global uncertainty
31 Mch 2025: COT Report: Ongoing USD selling amid mixed week for commodities
26 Mch 2025: Commodities show strength in Q1, led by a select few
25 Mch 2025: Crude oil Sanctions threat counters tariff-driven demand worries
24 Mch 2025: COT on Forex and Commodities - 24 March 2025
21 Mch 2025: Commodities weekly: High-flying precious metal sees profit taking
19 Mch 2025: Has the gold express already left the station?
17 Mch 2025: COT Report: Silver and copper stands out in week of energy weakness
14 Mch 2025: Gold surges past USD 3,000 as haven demand grows
12 Mch 2025: Tariffs and the energy transition: Key drivers of copper demand
11 Mch 2025: Gold holds steady despite deleveraging risks in volatile markets
10 Mch 2025: COT Report: Wholesale reductions in speculators' USD and commodity longs
7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: Tariff threat disconnects HG copper from global market
4 Mch 2025: Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: COT Report: Broad retreat sees WTI longs slump to 15-year low
28 Feb 2025: Commodities weekly: Broad weakness as tariff fatigue sets in
24 Feb 2025: COT Report: traders turn selective despite ongoing broad rally
21 Feb 2025: Commodities weekly: energy market strength and Trump rethoric fuel surge
18 Feb 2025: COT report: crude, gold and grains see mild profit taking
5 Feb 2025: Broad Strength Drives Commodities sector to 26-month High
4 Feb 2025: Crude Oil Wipes Out 2025 Gains as Tariffs and Demand Weighs
3 Feb 2025: COT Report: Mixed Week Seen Ahead of Trump's Tariff Offensive
1 Feb 2025: YouTube: Joining Kevin Muir on The Market Huddle podcast
Podcasts that include commodities focus:
4 April 2025: Markets melts down as recession risks go global
1 April 2025: Bracing for Liberation Day
25 Mch 2025: Did Trump just blink?
18 Mch 2025: US market found support, but how durable will it be?
14 Mch 2025: Is silver set to shoot the lights out?
10 Mch 2025: US un-exceptionalism is the theme
7 Mch 2025: US bear market risks ratchet higher. EUR train has left the station
4 March 2025: Are we on the verge of a big whoosh?
25 Feb 2025: Meltdown risks are rising. What to watch next
18 Feb 2025: Europe is on fire
5 Feb 2025: Mag 7 risks underappreciated?
3 Feb 2025: If new Trump tariffs stick, markets have only just begun to react
31 Jan 2025: Does the market think Trump is bluffing?
29 Jan 2025: The DeepSeek winners emerge
27 Jan 2025: DeepSeeking missile strikes global markets
24 Jan 2025: Four days in, Trump continues to dominate headlines, but ...
20 Jan 2025: Trump 2.0 swings into action
17 Jan 2025: Brace for Monday, as a new era begins
Quarterly Outlook
Global Head of Macro Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Global Head of Investment Strategy
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Global Head of Macro Strategy
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Chief Investment Strategist
Quarterly Outlook
Head of Commodity Strategy
Quarterly Outlook
Global Head of Macro Strategy
Quarterly Outlook
Head of Fixed Income Strategy