Commodity Outlook: Commodities rally despite global uncertainty

Mega-trends to drive long-term gains

In our opinion, the long-term trend for key commodities remains upward, driven by several major themes:

Crude oil: "having your cake and eating it too"

In the past four years, Iran and Venezuela’s production has risen by 1.6 million barrels per day, lifting their share of OPEC’s total production from 10.6% to 15.7%. In the same time period, the three Middle East GCC members of OPEC, led by Saudi Arabia, have voluntarily reduced their production by 1.6 million barrels per day. In the coming months, we see no major change in OPEC’s overall output, but instead a rotation of market shares.

Trump’s “Drill, baby, drill” stance and the administration's aim for a USD 50 oil price to cut inflation have also received some negative price attention. However, achieving lower prices much below current levels would hurt high-cost producers, many in the US, slowing and reversing production well before prices get anywhere near USD 50 per barrel. In other words, a lower oil price and rising US production cannot be achieved at the same time; hence our view that Brent towards USD 65 and WTI towards USD 60 offer good value.

Tariffs and energy transition: two key drivers of copper demand

At the time of writing, HG copper futures, traded in New York, trade at a 12% premium to the global benchmark price in London, and it could rise to 25% if that is the tariff eventually being implemented following an ongoing investigation, or fall sharply if no tariff is being introduced. However, given expectations that such an investigation will take time to complete, we are seeing several price-supportive developments that underpin prices in the short term before a more long-term structural support emerges, driven by the energy transition—one of our commodity-supportive mega-trends.

So while the latest price spike isn’t due to consumer demand but rather major stockpile shifts to the US, it will nevertheless help tighten the global market ahead of schedule with a major bulk of visible copper stocks at risk of ending up being left stranded in the US, a country that accounts for less than 10% of global copper consumption. However, with HG copper futures already trading up 25% year to date with London trailing at around 13%, we see bigger upside risks to London prices. Overall, these developments make it very difficult to project a near-term price target, as it will ultimately depend on the level of tariff, if any, the US government eventually decides upon.

Gold may head towards USD 3,300 with silver enjoying dual tailwinds

We raise our 2025 peak gold price to USD 3,300, while silver, with a relatively modest move lower in the gold-silver ratio to 75, may reach USD 44 per ounce during the same time frame, not least supported by the mentioned strength in transition metals, a group that silver also belongs to. The gold rally that began in 2022 and which gathered momentum last year continues to be fuelled by an increasingly uncertain geopolitical landscape, where global tensions and economic shifts have led investors to seek safer assets, a development that shows no signs of fading anytime soon.

The combination of central banks buying gold aggressively to diversify away from the USD and USD-based assets such as bonds, a well as concerns about mounting global debt, particularly in the United States, have prompted investors to hedge against economic instability by turning to precious metals. This focus will remain in the coming months, with the potential for additional support from tariffs-led market turmoil driving lower growth while inflation may reaccelerate.