Gold has set new records and gas prices will rise

Commodity prices are expected to fall in 2025 due to a weak global economic outlook and a recovering dollar, but gold and gas prices could rise this year, according to industry experts.

Commodities had a mixed year in 2024: while investors turned to gold to hedge against inflation, commodities such as iron ore fell as the world's largest metals consumer, China, struggled with moderate growth. The story will probably be similar this year.

“Commodities overall will be under pressure in 2025,” said Sabrin Chowdhury, head of commodities research at research firm BMI, adding that the strength of the U.S. dollar will reduce demand for commodities priced in U.S. dollars.

Market participants will be keeping an eye on further Chinese stimulus in hopes it could help revive demand for goods in the world's second-largest economy.

Last year, oil prices dropped weak Chinese demand and excess supply, with market observers expecting prices to remain under pressure in 2025.

International Energy Agency in November outlined a bearish picture of the oil market for 2025forecasting that global oil demand will grow below one million barrels per day. For comparison, in 2023 there will be an increase of two million barrels per day.

The Commonwealth Bank of Australia predicts Brent crude prices will fall to $70 a barrel this year on expectations of increased oil supply from non-OPEC+ countries dwarfing growth in global oil consumption.

In its December note, BMI said there will likely be an oversupply in the first half of 2025 as significant new production comes online from the US, Canada, Guyana and Brazil. Moreover, if OPEC+ plans to withdraw voluntary cuts materialize, oversupply will further pressure prices.

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

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

The gas level has increased

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

Ukraine's recent suspension of the flow of Russian gas to several European countries on New Year's Day introduced greater uncertainty in global gas markets. As long as restrictions remain in place, gas prices will likely remain elevated.

Colder weather throughout the rest of the winter in the U.S. and Asia could also push prices higher, Citi said.

BMI forecasts gas prices will rise 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 rising demand from sides of the LNG sector and higher net exports via pipelines.

U.S. Henry Hub natural gas prices, the index BMI was referring to, are currently $2.95 per MMbtu.

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

Gold can add shine

Gold prices hit a slew of record highs last year, and the streak of new record highs could extend into 2025.

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

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

Gold he cut best annual result over more than a decade last year. According to FactSet data, bullion prices increased by approximately 26% in 2024. central bank, as well as purchases by retail investors.

BullionVault and JPMorgan expect the gold price to rise to $3,000 per ounce in 2025.

Silver and platinum are likely to increase

Gold's poorer cousin, silver, could also see prices rise, especially as demand for solar energy – silver is used to make solar panels – remains stable and supply of the metal remains limited.

“Both silver and platinum have a strong underlying deficit and we believe it could be quite effective to catch up later in 2025 as base metals find more solid footing” – note JPMorgan analysts.

Silver is mainly used in industrial applications and is often used to make cars, solar panels, jewelry and electronics. It is also needed in creating artificial intelligence products and also has military applications, said CIO Juerg Kiener, CIO at Swiss Asia Capital.

That said, silver price growth will depend 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 raise concerns

Prices for copper, which is key to producing electric vehicles and power grids, could fall later reached record levels this year in connection with the global energy transformation.

“The potential slowdown in the energy transition due to Trump policy changes may go some way to dampening the ‘green sentiment’ that has driven prices higher in 2024.” – BMI wrote in a note.

While copper prices reached record highs in May 2024, largely as a result of market tightening, they continued to trend lower throughout the rest of the year and that trend will continue, John Gross, president of eponymous metals management consultancy John Gross and Company, told CNBC .

A cocktail of high inflation, elevated interest rates and a stronger dollar will impact all metals markets, a veteran metals marketer said.

Iron ore forecast to decline

Iron ore prices may also decline as a result of oversupply resulting from Chinese politics and geopolitics.

“Expected U.S. tariffs on China, the changing nature of Chinese stimulus and new cheap supply (will) push the market into further surplus,” Goldman Sachs said, forecasting prices to fall to $95 a tonne in 2025.

This is despite China likely to import record amount of iron ore this year– reports Reuters. According to FactSet data, iron ore prices have fallen by more than 24%.

Cocoa and coffee

Cocoa AND coffee prices stands out from the soft goods basket, reaching record levels in 2024, helped by unfavorable weather conditions and supply shortages in key producing regions. However, demand may decline in 2025.

“Given that the prices of these goods are much higher than production costs, we expect production to increase and demand to decline in the coming year,” he added. Rabobank researchers say.