Gold has set new records and gas prices are rising

Global commodity prices are expected to largely decline in 2025 due to a sluggish global economic outlook and a rising dollar, but gold and gas prices are expected to rally this year, according to industry experts.

2024 has been a mixed year for commodities: While investors flocked to gold to hedge against inflation, commodities such as iron ore fell as China, the world’s biggest metal consumer, grappled with weak growth. This year is likely to be the same story.

“Commodities in general will be under pressure in 2025,” Sabrin Chowdhury, head of commodities analysis at research firm BMI, said, adding that a stronger US dollar would limit demand for dollar-denominated commodities.

Market participants will be watching for further Chinese stimulus in the hope that it could help revive demand for commodities in the world’s second-largest economy.

Oil prices fell last year weak Chinese demand and a supply glut, and market watchers expect prices to remain under pressure in 2025.

International Energy Agency in November painted a bearish picture of the oil market for 2025predicting that global oil demand will grow below one million barrels per day. That compares with 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 increased oil supplies from non-OPEC+ countries, which will overshadow growth in global oil consumption.

In its December note, BMI said a supply glut is likely in the first half of 2025 as new production from the US, Canada, Guyana and Brazil comes online. In addition, if OPEC+ plans to reverse voluntary cuts materialize, excess supply will put further pressure on prices.

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

Brent, the global benchmark for crude oil last traded at $76.34 per barrel, about the same level as a year ago in early January.

Gas must rise

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

Ukraine’s recent cut-off of Russian gas in a number of European countries on New Year’s Day brought more uncertainty to global gas markets. While the shutdown is in effect, gas prices are likely to remain elevated.

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

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

U.S. Henry Center natural gas prices cited by BMI are currently trading at $2.95 per million baht.

“LNG will continue to drive new consumption, supported by growth in 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 the streak of new records could extend into 2025.

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

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

gold stabbed him best annual performance for more than ten years last year. Bullion prices are set to rise about 26% in 2024, FactSet data showed, thanks to central bank as well as purchases by retail investors.

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

Silver and platinum are likely to rise

Gold’s poorer cousin, silver, could also suffer a price rally, especially as demand for solar energy — silver is used to make solar panels — remains robust and supply of the metal remains tight.

“Both silver and platinum have strong underlying shortages, and we believe that catch-up trading later in 2025, once the base metals find a firmer footing, could be very powerful,” JPMorgan analysts noted.

Silver is mainly used in industry and is often included in the production of cars, solar panels, jewelry and electronics. It is also needed to create artificial intelligence products and also has military applications, said Swiss Asia Capital IT director Jürg Kiener.

However, silver’s upside potential will depend on global industrial demand, which will be affected by Trump’s tariffs, precious metals trading services group MKS Pamp wrote in a forecast report.

Copper faces require care

Prices for copper, which is key to the production of electric vehicles and power grids, may fall later shooting to record levels this year against the background of the global energy transition.

“A potential slowdown in the energy transition amid Trump’s policy shifts could somewhat dampen the ‘green sentiment’ that strengthened prices in 2024,” BMI wrote in a note.

While copper prices rose to a record high in May 2024 largely as a result of the market squeeze, they have declined through the end of the year and will continue to do so, John Gross, president of the eponymous metals management consultancy John Gross & Company, said CNBC.

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

Iron ore fall forecast

Iron ore prices may also fall due to oversupply as a result of China’s politics and geopolitics.

“Expected US tariffs on China, a change in the nature of Chinese stimulus and new low-cost supplies (will) push the market into further excess,” Goldman Sachs said, forecasting prices to fall to $95 a tonne in 2025.

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

Cocoa and coffee

Cocoa and coffee prices stands out in the soft goods basket, reaching record values ​​in 2024 due to adverse weather conditions and supply shortages in key production regions. But in 2025, demand may decrease.

“Given that these commodities are trading at well above cost of production, we expect production to increase and demand to decrease next year.” This is what Rabobank researchers say.