Commodity Prices to See a Sluggish 2025, Except for Gold and Gas
Commodity prices are expected to fall in 2025 due to a sluggish global economic outlook and a resurgent dollar, according to industry experts. However, gold and gas prices are poised to rally this year.
Commodities had a mixed 2024, with investors flocking to gold to hedge against inflation, while iron ore fell as China, the world’s largest consumer of metals, struggled with tepid growth. The story is likely to be the same in 2025, with commodities under pressure across the board.
BMI’s head of commodities analysis, Sabrin Chowdhury, said that the strength of the U.S. dollar will cap demand for commodities priced in the greenback. Market participants will be keeping an eye on further China stimulus, hoping it may fuel a recovery in commodities demand.
Oil prices, on the other hand, are expected to slip due to weak Chinese demand and a supply glut. The International Energy Agency forecasts global oil demand to grow at a slower pace in 2025. The strength of the dollar will also put pressure on oil prices.
Gas prices, however, are set to rise due to cold weather and geopolitics. Citi analysts said that colder weather in the U.S. and Asia could keep prices elevated. BMI forecasts gas prices to rise by about 40% in 2025 to $3.4 per million British thermal units (MMbtu) compared to an average of $2.4 per MMbtu in 2024.
Gold prices are expected to add sheen, with investors optimistic about the metal’s role as a hedge against risk. JPMorgan analysts expect gold prices to rise to $3,000 per ounce in 2025. Silver and platinum are also likely to advance, driven by strong demand from the solar power and industrial sectors.
The global crude benchmark Brent was last trading at $76.34 per barrel, around the same levels as it was a year ago. The strength of the dollar will put pressure on oil and gas prices, but the energy sector will continue to evolve, with growing demand for LNG and higher net pipeline exports.
Copper prices, which rose to a record high this year, are expected to trend lower. The potential deceleration of the energy transition may dampen the “green sentiment” that bolstered prices in 2024. Iron ore prices may also decline due to an oversupply resulting from Chinese policies and geopolitics.
Cocoa and coffee prices, which scaled record highs in 2024, may taper in 2025 due to production expansion and demand contraction.