Gold hit new records and gas prices soared

Global commodity prices are expected to fall mainly in 2025 due to a sluggish global economic outlook and a recovering dollar, but gold and gas prices are set to rise this year, according to industry experts.

Commodities had a mixed year in 2024: As investors flocked to gold to hedge against inflation, commodities such as iron ore fell as China, the world’s biggest metal consumer, struggled with weak growth. The story will be the same this year.

“Overall, commodities will remain under pressure in 2025,” said Sabrin Chowdhury, head of commodity analysis at BMI, adding that the strength of the US dollar will limit demand for dollar-denominated goods.

Market participants will be watching for further stimulus from China in hopes it could spur a recovery in commodity demand in the world’s second-largest economy.

Last year crude oil prices were dragged down weak Chinese demand and a supply glut and market watchers expect prices to remain under pressure in 2025.

The International Energy Agency in November He drew a bearish picture of the oil market for 2025predicts that global oil demand will increase by less than one million barrels per day. This compares to an increase of two million barrels per day in 2023.

The Commonwealth Bank of Australia sees Brent crude prices falling to $70 a barrel this year on expectations that oil supplies from non-OPEC+ countries will increase, outpacing growth in global oil consumption.

BMI said in a December note that the first half of 2025 will see a supply glut as significant new products come online from the US, Canada, Guyana and Brazil. Also, if OPEC+ plans to withdraw voluntary cuts, excess supply will further depress prices.

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

Global crude oil benchmark Brent it last traded at $76.34 a barrel, the same level as in early January a year ago.

Gas will increase

Citi analysts said global natural gas prices have risen since mid-December 2024 due to cold weather and geopolitics.

Ukraine recently stopped supplying Russian gas New Year’s Day in several European countries brought more uncertainty to global gas markets. As long as the cut remains in effect, gas prices will remain high.

Citi said colder weather in the U.S. and Asia for the rest of the winter could also boost prices.

BMI forecasts gas prices to rise by around 40% in 2025 to an average of $3.4 per 2.4 million British thermal units in 2024 driven by increased demand from the LNG sector and higher net pipeline exports.

US Henry Hub natural gas prices, the benchmark cited by BMI, are currently trading at $2.95 per MMbtu.

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

Gold can add sparkle

Gold prices hit all-time highs last year, and new records could be extended into 2025.

“Investors are optimistic about gold and silver for 2025 because they are very pessimistic about geopolitics and sovereign debt,” said Adrian Ash, director of research at bullion investment services firm BullionVault, emphasizing the yellow metal’s role as a hedge against risk.

JPMorgan analysts also expect gold prices to rise, particularly if US policy becomes “more disruptive” in the form of rising tariffs, heightened trade tensions and higher risks to economic growth.

Gold its notched best annual performance in more than a decade last year. Bullion prices are up nearly 26% in 2024, according to data from FactSet. central bank as well as retail investor purchases.

BullionVault and JPMorgan expect gold prices to rise to $3,000 an ounce in 2025.

Silver and platinum will advance

Silver, gold’s poor cousin, could also see prices rise, especially as demand for solar energy — silver is used in the construction of solar panels — remains steady and supplies of the metal remain tight.

“Both silver and platinum have strong underlying deficit fundamentals, and we think holding trades could be quite strong in 2025, once the base metals find a firmer footing.,” JPMorgan analysts noted.

Silver is mainly used in industrial applications and is often incorporated into the manufacture of cars, solar panels, jewelry and electronics. Juerg Kiener, CIO of Swiss Asia Capital, says artificial intelligence is also necessary for product development and has military applications.

Precious metals trading services group MKS Pump noted in a forecast report that the rise in silver prices will depend on global industrial demand, which will be affected by Trump’s tariffs.

Copper faces demand cares

Copper prices, key to the production of electric cars and power grids, could fall. this year has reached a record high behind the global energy transition.

“A potential slowdown in the energy transition in the wake of Trump’s policy changes could somewhat weaken the ‘green sentiment’ that is boosting prices in 2024,” BMI wrote in a note.

Although copper prices rose to record highs in May 2024, largely as a result of a tight market, they have been trending lower for the rest of the year and will continue to do so. The company told CNBC about it.

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

Iron ore forecast to fall

Iron ore prices may also fall amid oversupply stemming from Chinese politics and geopolitics.

Goldman Sachs forecast prices to fall to $95 a tonne in 2025, adding that “anticipated US tariffs on China, the changing nature of Chinese stimulus and a new cheap supply market will push the surplus further.”

However, China can import record amounts of iron ore this yearReuters reports. Iron ore prices fell more than 24%, according to FactSet.

Cocoa and coffee

cocoa and coffee prices 2024 stands out among the soft commodity basket, reaching record highs due to unfavorable weather conditions and tight supply in key producing regions. But in 2025, the demand may decrease.

“Given that these commodities are trading well above production cost, we expect production to expand and demand to contract next year.” Rabobank researchers said.