Commodity Insights

Commodity Outlook – Early 2026: Momentum with Divergence

Precious Metals | Gold & Silver
Gold has opened 2026 on a strong bullish note, extending last year’s exceptional rally. Prices are hovering near $4,380/oz, building on a nearly 65% surge in 2025, the strongest annual performance in over four decades. The rally is being underpinned by a confluence of factors—heightened geopolitical risks, expectations of lower interest rates, sustained central-bank buying, and renewed ETF inflows.
The Federal Reserve’s December meeting minutes reinforced this supportive backdrop, signalling openness to policy easing if inflation continues to cool. Ongoing Russia–Ukraine tensions and tighter U.S. enforcement on Venezuelan oil trade have further boosted safe-haven demand. While volatility remains elevated after the sharp run-up, the near-term bias for gold and silver stays constructive, with dips likely to attract buying interest.

Energy | Crude Oil
Crude oil started 2026 on a softer footing, with WTI easing toward $57/bbl after a sharp correction in 2025—the steepest annual decline since 2020. Although geopolitical developments, including renewed attacks on Black Sea energy infrastructure and tighter U.S. scrutiny of Venezuelan exports, are offering near-term support, broader sentiment remains cautious.
Markets are closely watching the upcoming OPEC+ meeting, where producers are expected to maintain the pause on output hikes in Q1. Supply disruptions, such as weather-related halts at Kazakhstan’s export terminals, add uncertainty, but uneven global demand and last year’s correction continue to cap upside. Overall, crude appears to be forming a fragile base, supported by geopolitics and potential Chinese stockpiling, but lacking a strong demand-led trigger.

Base Metals | Aluminium & Copper
Base metals have begun the year firmly, led by aluminium, which has surged above $3,000/ton for the first time in over three years. Tight supply conditions—driven by caps on Chinese smelting capacity and high power costs in Europe—have eroded inventories, while demand from construction and renewable energy remains resilient.
Copper continues to ride the momentum from its stellar 2025, when prices jumped over 40% to record highs. Strong demand from AI infrastructure and energy-transition projects, a softer U.S. dollar, and fresh supply risks—following strike action at Capstone Copper’s Mantoverde mine—keep the medium-term outlook bullish, albeit with periodic volatility.

Natural Gas | Regional Divergence
Natural gas markets are showing sharp regional divergence. In the U.S., prices have slipped to a two-month low, pressured by warmer early-January weather forecasts and lower-than-expected storage withdrawals, dampening near-term demand sentiment.
In contrast, European gas prices have edged higher, supported by colder weather lifting heating demand. However, ample supply, aided by steady LNG inflows, has kept prices largely range-bound, limiting upside despite seasonal support.