The year 2025 marked a transformative period for global commodity markets, where trade and investment patterns shifted across markets and trends diverged sharply. Precious metals stole the spotlight with an unrelenting rally, while select industrial metals climbed steadily, even as crude oil languished in a prolonged downturn. Beneath these contrasting moves lay a web of shared macroeconomic forces. Escalating US trade tensions and mounting fears of a global slowdown reshaped investor sentiment, driving a surge in safe-haven demand for gold and silver, widening price gaps in metals like copper, and exerting heavy pressure on growth-sensitive commodities such as crude oil.
Gold: A rise in investment appetite and safe-haven demand
Gold delivered one of its strongest performances on record in 2025. Spot prices on the London Bullion Market Association (LBMA) platform surged to successive all-time highs, reflecting sustained investor demand. The year began with gold trading at USD 2,626 per troy ounce on 1st January 2025, before rallying to a historic high of USD 4,549 per troy ounce by December. Multiple factors underpinned this extraordinary ascent. The US Federal Reserve implemented three 25-basis-point interest rate cuts during the year, reinforcing expectations of a prolonged accommodative monetary environment. At the same time, persistent geopolitical tensions and heightened trade-related uncertainties strengthened gold’s appeal as a store of value.
Although optimism briefly emerged following a tariff agreement between the United States and China, underlying economic data continued to highlight structural challenges. US manufacturing activity contracted for the ninth consecutive month in November, as factories struggled with weak order books and rising input costs, partly linked to lingering tariff effects. China’s manufacturing PMI also remained in contractionary territory, underscoring subdued demand and indicating that trade progress has yet to translate into a meaningful economic recovery. In addition, steady central bank purchases and strong inflows into gold-backed exchange-traded funds (ETFs) continue to reinforce investor confidence, providing a solid foundation for prices at elevated levels through the year 2026.
Silver: Supply constraints and strong industrial demand
Silver outperformed most commodities in 2025, posting an exceptional year-to-date gain of 156%. LBMA spot silver prices surged to an unprecedented high of USD 83.62 per troy ounce, marking a historic milestone for the metal. The rally was driven by a powerful combination of tight global supply and rising expectations of monetary easing by the US Federal Reserve. Escalating trade tensions and a dovish policy outlook supported safe-haven demand, while robust industrial consumption, particularly from the green energy and electrification sectors, provided strong underlying support. Supply dynamics played a crucial role in amplifying the rally. The closure of several zinc and copper mines across the globe, where silver is typically produced as a by-product, significantly constrained available supply, widening the gap between demand and production. With strong fundamentals in place for 2026, a structural supply deficit combined with resilient industrial demand is expected to provide a solid floor for silver prices going forward.
Crude oil: Oversupply to weigh on prices
In stark contrast, crude oil markets endured a challenging year, with prices declining by more than 20% year to date. The downturn was primarily driven by a sharp rise in global supply, fuelled by output increases from OPEC+ as well as expanding production from the United States and other non-OPEC producers. Market sentiment weakened further after OPEC suspended plans to unwind production cuts, signalling concerns over a looming supply glut. Between April and December, OPEC raised output targets by approximately 2.9 million barrels per day, while agreeing to pause further increases during the first quarter. Meanwhile, OPEC+ ministers are widely expected to maintain existing group-wide production targets into 2026, including a 2 million bpd cut shared by most members and extended through the end of next year. Despite robust crude oil imports from China, the world’s largest oil buyer, concerns over excess supply continue to overshadow demand optimism. Fears of a global economic slowdown and softer fuel consumption have capped any meaningful price recovery. Adding to the complexity, shipping costs are expected to remain elevated into the first half of 2026, as an ageing global tanker fleet and expanding Western sanctions constrain logistics. Under the current production policies, the crude oil market appears unlikely to witness a structural recovery without a significant shift in output strategy from key producers or a material improvement in global demand conditions.
Copper: Supply disruptions and tariff-driven dislocations
Copper emerged as one of the strongest performers among base metals in 2025. Prices on the London Metal Exchange (LME) surged to record highs in October and remained elevated through early November, with benchmark futures touching an all-time high of USD 12,960 per metric tonne in December. The rally was primarily driven by intensifying supply concerns following multiple mine closures and operational disruptions. Production challenges were particularly evident in Chile. State-owned producer Codelco reported a 7% year-on-year decline in September output and 14.3% in October. Output at a mine jointly operated by Glencore and Anglo American fell by 26% in September and 29.3% in October, while BHP’s Escondida mine posted a 17% increase in September and 11.7% in October, offering only partial offset to broader supply losses.
Trade policy developments further tightened the market. The US imposed a 50% tariff hike on copper imports, including semi-finished products such as pipes, wires, rods, and sheets, as well as copper-intensive derivatives. These measures disrupted supply chains, raised import costs, and prompted major suppliers to divert shipments away from the US, resulting in artificial shortages. Consequently, the COMEX copper premium over LME widened sharply, while inventories in COMEX warehouses surpassed those in both LME and SHFE, reflecting accelerated stockpiling by US importers seeking to hedge against tariff risks. On the demand side, elevated prices constrained Chinese imports, while a strong US dollar capped upside, limiting the upward momentum despite tight physical conditions.
Aluminium: Energy constraints and trade barriers drive prices higher
Aluminium prices climbed to their highest level in over two and a half years in early December, with LME benchmark gaining 15% supported by robust Chinese import demand, improving trade sentiment, and supply disruptions across multiple regions. Rising energy costs emerged as a critical constraint on production, particularly in Oceania, where output declined to 923,000 tonnes in the first half of 2025 amid aging infrastructure and escalating power costs. Looking ahead, supply risks remain elevated. Rio Tinto announced plans to cut output at its alumina refinery by 40% starting October 2026, aiming to extend the plant’s operational life to 2035 by managing waste generation more effectively. Existing disposal facilities are expected to reach capacity by 2031, underscoring the structural challenges facing alumina supply. Meanwhile, the US raised tariffs on aluminium imports by 50%, triggering a sharp decline in containerized shipments from China and reinforcing regional supply fragmentation. These trade barriers are expected to further tighten availability in the US market, adding to price support.
