• Commodities soar with metals and energy leading
  • Tariffs push copper and platinum to new highs
  • Silver’s supply gap could make it the star of 2025

 

It’s only January, but the commodities market is already flexing.

The Bloomberg Commodity Index has jumped over 3% in the first couple of weeks, defying multiple headwinds from a stronger dollar, rising yields, and even whispers of trade wars.

“Given the level of global uncertainty, it’s probably no surprise to see gold reach a one-month high,” said Ole Hansen said, Head of Commodities at Saxo Markets.

But… surprise, surprise, it’s not just gold that’s driving the bus – silver, copper, and platinum are all in the mix, too, showing just how exciting things are getting.

Hansen pointed out that precious metals are once again serving as safe havens for investors looking to hedge against the global chaos.

But what’s really grabbed attention this year, according to Hansen, is the surge in energy and industrial metals.

Copper and platinum, both key industrial players, are seeing a major lift, driven by demand from factories and investors alike.

It’s not just short-term trading pushing these metals up, there’s something bigger unfolding, Hansen said.

 

Industrial metals shine as tariffs loom large

Another reason why copper and platinum have spiked this year is trade tariffs.

Tariffs are about to disrupt market flow, and it’s already causing some anomaly and volatility in futures prices.

In the US futures market, these metals are rising faster than they normally would.

“Prices have risen to levels relative to spot prices that are not justified by the typical costs associated with funding and storage,” said Hansen.

With Trump’s promise to slap tariffs coming back into focus, short selling these metals is getting more expensive.

This has traders scrambling to buy up physical metals like copper to cover their positions, Hansen said.

The result is that copper premiums in China are hitting a one-year high, and New York copper futures are testing resistance levels near their 200-day moving average.

 

A polarised world drives precious metal demand

Then there’s the shiny stuff – gold and silver.

The geopolitical landscape is more unpredictable than ever, pushing investors to hedge against all kinds of uncertainties.

“The demand for investment metals has been driven by an increasingly uncertain geopolitical landscape, as global tensions and economic shifts have led investors to seek safer assets,” Hansen said.

Gold had a record run in 2024, and it looks like that momentum is spilling into 2025.

But it’s silver that might actually steal the show this year, Hansen said.

With industrial demand on the rise, silver is facing a supply deficit that could deepen as ETFs keep buying up more “paper” silver.

“Silver’s sustained industrial demand is expected to keep it in a supply deficit through 2025,” Hansen said, adding that silver might just outperform gold this year.

If the gold-to-silver ratio drops from its current level of 88 to 75 (as predicted), silver could soar past US$38 per ounce, making it a potential outperformer in the precious metals space.

So, what does all this mean for investors? Well, the message is clear: metals are back in action.

 

A strong start to crude oil

Then there’s crude oil.

If you’ve been hearing all the doom and gloom about oil markets in 2025 – oversupply, China’s economy slowing, the usual suspects – you’d be forgiven for thinking oil was headed straight for a crash.

But no, it’s doing the opposite this year.

WTI and Brent crude have jumped out of the gates with strong gains, driven by fresh sanctions on Russia.

“WTI and Brent crude oil prices have started the year with solid gains, driven also by increased winter demand, particularly in the US, which is witnessing an exceptionally cold January,” Hansen said.

What’s more, oil inventories at Cushing, Oklahoma (home to WTI futures) have sunk to their lowest level in over a decade.

That inventory drop has created a “backwardation structure,” where prices for immediate delivery of oil are higher than for future delivery, signalling tight supply right now.

And let’s not forget the potential for more sanctions on both Russia and Iran, which could drive oil prices even higher.

“These developments may further increase demand for crude from Middle East producers, led by Saudi Arabia, the world’s top swing producer,” Hansen said.

 

This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decision.

Read MoreSilver

You might be interested in