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Highlights
- Gold hits record highs amid inflation fears and tariff uncertainty
- Copper rallies past $10,000 as tariff risks loom large
- Oil outlook weakens on geopolitical shifts and surplus concerns
With the next wave of U.S. tariffs expected by April 2, the global commodity markets are on edge. The Trump administration is set to announce individualized tariffs on over 200 trade partners, escalating fears of disrupted supply chains and inflationary pressures.
Gold has emerged as a clear standout in this climate. Prices recently crossed a historic $US3057 an ounce, and Citi has now lifted its near-term forecast to $US3200. The surge is fueled by investor flight to safety, rising central bank purchases, and concerns that aggressive U.S. trade policies may drag the economy into a recession.
Australian investors have also taken notice. The Perth Mint Gold exchange-traded fund (ASX:PMGOLD), which offers a low-cost pathway to physical gold exposure, continues to attract attention as a hedge against economic uncertainty. Meanwhile, gold miners such as Evolution Mining (ASX:EVN) are benefiting from rising bullion prices, thanks to strong free cash flow and leveraged exposure to the metal's rally.
While gold enjoys safe haven demand, copper markets have witnessed sharp volatility. Prices surged above $US10,000 a tonne for the first time since October. The spike follows reports that the U.S. Commerce Department is investigating copper imports, signaling potential tariffs of up to 25% later this year.
Copper futures in New York have jumped 27% year-to-date, with London Metal Exchange prices rising 14%. Citi sees room for further gains through arbitrage trading, capitalizing on the growing price gap between U.S. and international markets. If tariffs take effect, this spread could widen from the current 16-17% to as much as 25%, offering substantial trade opportunities.
However, not all commodities are benefitting from the tariff-driven shake-up. Oil prices could face downward pressure, with Citi projecting a drop to $US60 a barrel in the second half of 2025. Factors include an expected supply surplus by 2026, potential U.S. subsidies for domestic production, and ongoing geopolitical shifts—particularly Trump’s aim for a Russia-Ukraine peace deal and the fragile U.S.-Iran relationship.
Overall, the commodity space is bracing for a storm. With tariff threats on the horizon and macroeconomic shifts in motion, gold and copper are rising stars, while oil faces a cloudy outlook. Investors and analysts alike will be watching closely as April approaches and policy developments unfold.
