Several commodities face headwinds in 2025 — but this metal’s record rally is set to continue

Commodity prices are largely expected to fall in 2025 due to a sluggish global economic outlook and a resurgent dollar, but gold and gas prices are poised to rally this year, according to industry experts.

Commodities had a mixed 2024: While investors flocked to gold to hedge against inflation, commodities such as iron ore fell as the world’s largest consumer of metals, China, struggled with tepid growth.

The story this year is likely to be the same.

“Commodities in general will be under pressure across the board in 2025,” said research firm BMI’s head of commodities analysis Sabrin Chowdhury, adding that the strength of the US dollar will cap demand for commodities priced in the greenback.

Market participants will be keeping an eye on further China stimulus in hopes that it may fuel a recovery in commodities demand in the world’s second-largest economy.

Oil prices to slip

Crude oil prices last year were dragged down by weak Chinese demand and a supply glut, and market watchers expect prices to remain pressured in 2025.

The International Energy Agency in November painted a bearish oil market picture for 2025, forecasting global oil demand to grow under a million barrels per day. This compares to a two million barrel per day increase in 2023.

Commonwealth Bank of Australia sees Brent oil prices falling to $US70 ($112) per barrel this year on expectations increased oil supply from non?OPEC+ countries that’ll 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 glut as substantial new production from US, Canada, Guyana and Brazil comes online. Also, if OPEC+ plans to roll back voluntary cuts materialise, the oversupply will further pressure prices.

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

Global crude benchmark Brent was last trading at $US76.34 ($122.33) per barrel, around the same levels as it was a year ago in early January.

Gas set to rise

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

Ukraine’s recent halt of Russian gas flow to several European nations on New Year’s Day has introduced greater uncertainty to the global gas markets. As long as the cutoff remains in place, gas prices are likely to remain elevated.

Colder weather for the rest of winter in the US and Asia could also keep prices elevated, said Citi.

BMI forecasts gas prices to rise by about 40 per cent in 2025 to $US3.4 ($5.45) per million British thermal units (MMbtu) compared to an average of $US2.4 ($3.85) 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 that BMI referred to, are currently trading at $US2.95 ($4.73) per MMbtu.

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

Gold may add sheen

Gold prices notched a slew of all-time highs last year, and the run of fresh records could extend in 2025.

“Investors are optimistic about gold and silver for 2025 because they are so pessimistic on geopolitics and government debt,” said Adrian Ash, director of research at BullionVault, a gold investment services firm, emphasising on the yellow metal’s role 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, elevated trade tensions and higher risks to economic growth.

Gold notched its best annual performance in over a decade last year. Bullion prices rose about 26 per cent in 2024, data from FactSet showed, driven by central bank as well as retail investor purchases.

BullionVault and JPMorgan expect gold prices to go up to $US3,000 ($4,807) per ounce in 2025.

Silver and platinum likely to advance

Gold’s poorer cousin, silver, could also see prices rise, especially as demand for solar power — silver is used in building solar panels — remains resilient and the metal’s supply stays limited.

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

Silver is primarily utilised in industrial applications and is frequently incorporated in the production of automobiles, solar panels, jewellery and electronics.

It is also needed in building artificial intelligence products and has military applications as well, said CIO of Swiss Asia Capital’s CIO Juerg Kiener.

That said, silver’s upside will be dependent on global industrial demand which will be impacted by Trump’s tariffs, precious metals trading services group MKS Pamp wrote in an outlook report.

Copper faces demand worries

Prices of copper, which is key to the manufacturing of electric vehicles and power grids, may see a dent after shooting to a record high this year on the back of a global energy transition.

“A potential deceleration in energy transition amid Trump’s policy shifts might 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 squeezed market, they trended lower for the rest of the year, and will continue to do so, John Gross, president at the eponymous metals management consultancy John Gross and Company, told CNBC.

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

Iron ore forecast to drop

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

“The expected US tariffs on China, changing nature of Chinese stimulus and new low-cost supply [will] push the market into further surplus,” Goldman Sachs said, forecasting prices to decline to $US95 ($152) per tonne in 2025.

This despite China likely to import record amount of iron ore this year, according to Reuters. Iron ore prices fell over 24%, according to data from FactSet.

Cocoa and coffee

Cocoa and coffee prices stand out amongst the soft commodities basket, having scaled record highs in 2024 fuelled by adverse weather conditions and supply tightness in key producing regions. But demand may taper in 2025.

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