Gold set for new records and gas prices to rise

Global commodity prices are widely expected to fall in 2025 due to a sluggish global economic outlook and a rebounding dollar, but gold and gas prices are poised to rebound this year, according to the industry experts.

Commodities had a mixed 2024: While investors flocked to gold to hedge inflation, commodities such as iron ore fell as the world’s largest consumer of metals, the China has struggled with tepid growth. This year’s story is likely to be the same.

“Commodities in general will be under pressure throughout 2025,” said Sabrin Chowdhury, head of commodities analysis at research firm BMI, adding that the strength of the US dollar will limit demand for commodities to price in the greenback.

Market participants will be watching for further stimulus from China in the hope that it can fuel a recovery in demand for raw materials in the world’s second-largest economy.

Crude oil prices last year were dragged down weak Chinese demand and plenty of supply, and market watchers expect prices to remain under pressure in 2025.

The International Energy Agency in November painted a bearish oil market picture for 2025which predicts that global oil demand will grow below one million barrels per day. This is compared to an increase of two million barrels per day in 2023.

The Commonwealth Bank of Australia sees Brent oil prices falling to $70 a barrel this year on expectations of an increase in oil supply from non-OPEC+ countries that will eclipse the rise in global oil consumption.

BMI said in its December note that the first half of 2025 was likely to see a supply surplus as substantial new production from the United States, Canada, Guyana and Brazil comes online. Also, if OPEC+ plans to postpone the voluntary cuts materialize, the oversupply will put more pressure on prices.

BMI noted that the demand picture in 2025 was not clear. “Global demand for oil and gas remains uncertain, with steady economic growth and rising fuel demand offset by trade war impacts, inflation and contracting demand in developed markets.”

Brent, global crude oil benchmark it was last traded at $76.34 per barrel, around the same levels as it was a year ago in early January.

The gas has to go up

Global natural gas prices have rallied since mid-December 2024, driven by cold weather and geopolitics, Citi analysts said.

Ukraine recently stopped the flow of Russian gas to many European nations on New Year’s Day introduced a major uncertainty to the global gas markets. While the cutoff remains in place, gas prices are likely to remain high.

Colder weather for the rest of the winter in the United States and Asia could also keep prices high, Citi said.

BMI predicts that gas prices will increase by around 40% in 2025 to $3.4 per million British thermal units (MMbtu) compared to an average of $2.4 per MMbtu in 2024, driven by growing demand from the LNG sector and higher net pipeline exports.

US Henry Hub natural gas prices, which was the gauge BMI referenced, are currently trading at $2.95 per MMbtu.

“LNG will continue to drive new consumption, supported by growing export capacity and strong demand in Europe and Asia,” BMI analysts wrote.

Gold can add shine

Gold prices hit a slew of all-time highs last year, and the run to new records could extend into 2025.

“Investors are bullish on gold and silver for 2025 because they are so pessimistic about geopolitics and government debt,” said Adrian Ash, director of research at BullionVault, a services firm. gold investment, emphasizing the role of the yellow metal as a hedge against risk.

JPMorgan analysts also expect gold prices to rise, especially if US policies become “more disruptive” in the form of increased tariffs, heightened trade tensions and higher risks to economic growth.

Gold touched his best annual performance in more than a decade last year. Bullion prices are set to rise about 26% in 2024, FactSet data shows, led by the central bank and the purchase of retail investors.

BullionVault and JPMorgan expect gold prices to rise to $3,000 per ounce by 2025.

Silver and platinum are likely to advance

Gold’s poorer cousin, silver, could also see prices rise, especially as demand for solar energy – silver is used in the construction of solar panels – remains resilient and supply of the metal remains tight. .

“Both silver and platinum have strong underlying deficit fundamentals, and we think a trade recovery later in 2025, once the base metals find a firmer footing, could be quite potent.,” JPMorgan analysts have noticed.

Silver is mainly used in industrial applications and is often incorporated in the production of automobiles, solar panels, jewelry and electronics. It is also needed in the construction of artificial intelligence products and also has military applications, said Swiss Asia Capital CIO Juerg Kiener.

That said, silver growth will depend on global industrial demand that will be affected by Trump’s tariffs, precious metals trading services group MKS Pamp wrote in an outlook report.

Copper faces beg for concern

The prices of copper, which is key to the manufacture of electric vehicles and energy networks, may see a dent later. shooting at a record high this year in the wake of a global energy transition.

“A potential deceleration in the energy transition amid Trump’s policy changes could dampen, to some extent, the ‘green sentiment’ that bolstered prices in 2024,” BMI wrote in a note.

While copper prices rose to a record high in May 2024 largely as a result of a tight market, they trended lower for the rest of the year, and will continue to do so, John Gross, president of namesake metals management consultancy John Gross and Company, told CNBC.

A cocktail mix of high inflation, high interest rates and a stronger dollar will weigh on all metals markets, the metals market veteran said.

Iron ore is expected to decline

Iron ore prices may also rise on the back of an oversupply resulting from Chinese policies and geopolitics.

“Planned US Tariffs on China, Changing Nature of Chinese Stimulus and New Low-Cost Offer [will] pushing the market into more surplus,” said Goldman Sachs, which predicts prices will drop to $95 per ton in 2025.

This despite the fact that China will probably import record amount of iron ore this yearaccording to Reuters. Iron ore prices fell more than 24%, according to FactSet data.

Cocoa and coffee

Cocoa and coffee prices stands out among the basket of soft raw materials, which climbed to record highs in 2024 fueled by adverse weather conditions and tight supply in key production regions. But the demand may decrease in 2025.

“Given that these commodities are traded at levels well above the cost of production, we expect production to expand and demand to contract in the coming year.” Rabobank researchers said.