The commodities sector experienced mixed results in 2024. While some assets such as gold, silver, and cocoa performed well, others like coal, lithium, and soybeans struggled. Looking ahead, 2025 could bring further challenges, with economic uncertainties, fluctuating geopolitics, and policy shifts poised to impact global commodity prices.
Commodity Price Declines Expected in 2025
According to Fitch Solutions’ BMI, 16 out of 27 of the most traded and valuable commodity markets are likely to see average prices lower in 2025 compared to 2024. BMI projects its Aggregate Commodity Price Index to decline by 1% in 2025, following a modest 2% growth forecast for 2024. Key risks identified by BMI include slower global economic growth, tensions between major economies, and ongoing conflicts in the Middle East and Ukraine. Additionally, the strong US dollar may make commodities more expensive for international buyers, further complicating price stability.
Energy Sector Faces Key Challenges
The energy sector, particularly natural gas, is likely to face continued pressure. In 2024, the US benchmark Henry Hub Natural Gas Spot Price dropped significantly, reaching the lowest inflation-adjusted levels ever reported. However, BMI expects a 42% increase in natural gas prices in 2025, forecasting prices to rise to $3.4 per MMBtu, driven by higher global demand for LNG and a colder-than-usual Northern Hemisphere winter.
On the other hand, oil prices are expected to remain relatively stable, despite concerns over weak demand from China and a well-supplied market. The International Energy Agency (IEA) revised its global oil demand growth forecast to 1.1 million barrels per day, slightly improving expectations from Asia’s economic rebound. However, supply gluts could still weigh on prices, with significant new production coming online in regions like the US, Canada, Guyana, and Brazil.
Coal and Precious Metals May See Bright Spots
While oil and natural gas may face headwinds, coal could continue to perform well in 2025. Despite the growth of renewable energy sources, global demand for coal remains strong, driven by power generation needs and expanding energy demands in regions like Asia. S&P Global reports that coal-fired power generation set new records in 2023 and 2024, and this trend may continue into the new year.
Precious metals like gold and silver are also expected to see higher prices in 2025. Central banks, particularly China’s People’s Bank, are likely to continue buying gold, which will support prices. J.P. Morgan projects gold to reach $3,000 per ounce by the end of the year, and silver may see a price rally toward $38 per ounce.
Challenges for Base Metals Like Copper
Base metals, particularly copper, face a more uncertain future. While copper reached record highs in 2024, analysts expect a downward trend in 2025, partly due to reduced demand in energy transition projects under the Trump administration’s policies. Additionally, high inflation, interest rates, and a stronger dollar may dampen copper’s growth. However, the growing demand for electric vehicles (EVs) in China may help support copper prices, with some analysts predicting modest price increases for the year.
Conclusion
In summary, the commodities market in 2025 is likely to experience mixed performances, with significant downward pressures expected in sectors like energy and base metals. However, precious metals such as gold and silver, along with coal, may outperform. Global geopolitical risks, economic shifts, and policy changes will play crucial roles in determining how commodity prices evolve over the year. Traders and investors should remain cautious, as these factors could lead to increased volatility and potential price fluctuations.
People May Ask
Q1: What are the major challenges facing the commodities market in 2025?
The major challenges include slower global economic growth, tensions between the US and China, geopolitical conflicts in the Middle East and Ukraine, and a stronger US dollar making commodities more expensive for international buyers.
Q2: What is the forecast for natural gas prices in 2025?
Natural gas prices are expected to increase by 42% in 2025, with the US benchmark Henry Hub gas price reaching $3.4 per MMBtu, driven by higher global demand for LNG and colder winter conditions.
Q3: Will oil prices increase in 2025?
Oil prices are expected to remain stable in 2025. While demand is projected to grow by 1.1 million barrels per day, supply from new production sources may lead to supply gluts, keeping prices subdued.
Q4: Are coal prices expected to rise in 2025?
Yes, coal prices may continue to rise in 2025, driven by strong demand for coal in power generation, particularly in regions like Asia.
Q5: How will gold and silver perform in 2025?
Precious metals like gold and silver are expected to see price increases in 2025, with gold potentially reaching $3,000 per ounce and silver rising to around $38 per ounce, supported by strong central bank buying and investor demand for safe-haven assets.
Pari is a passionate writer known for captivating stories that blend imagination and reality. Inspired by travel, history, and everyday moments, Pari crafts narratives that resonate deeply with readers.