Commodity Markets Face Volatility Amid Geopolitical Tensions and Economic Shifts

Commodity Markets Face Volatility Amid Geopolitical Tensions and Economic Shifts

As of June 27, 2025, commodity markets are experiencing significant volatility influenced by geopolitical tensions, economic policy changes, and supply-demand imbalances. Key developments across various commodities are shaping the current market landscape.

Energy Commodities: Oil and Natural Gas

Oil prices have surged over $3 per barrel due to escalating conflicts in the Middle East, raising concerns about potential disruptions in global crude supplies. This increase reflects market apprehensions about the stability of oil-producing regions. Oil jumps over $3 a barrel as Middle East conflict stokes supply worry

Natural gas prices are on an upward trajectory, driven by increased power demand and a reduction in supply glut. Analysts suggest that easing oversupply and higher consumption are contributing to this bullish trend. Natural gas prices on red-hot streak as bulls eye easing glut, higher demand: RBC

Precious Metals: Gold and Silver

Gold prices have reached record highs, with spot gold advancing 1.7% to $3,383.87 an ounce, driven by trade war concerns and a weaker dollar. This surge underscores gold’s role as a safe-haven asset amid global economic uncertainties. Gold soars to record high on trade war concerns, weaker dollar

Silver prices have experienced volatility, recently hitting an over eight-week low due to market concerns about industrial demand. Despite typically moving alongside gold, silver’s significant industrial applications make it sensitive to shifts in manufacturing and technology sectors. Silver hits over eight-week low as market frets about industrial demand

Base Metals: Copper and Nickel

Copper smelters are facing a market and pricing crisis, with treatment and refining charges turning negative. This situation is attributed to an imbalance caused by excessive smelting capacity, particularly in China, outpacing modest global mine production growth. Copper smelters are facing both market and pricing crises

Indonesia, the world’s largest nickel producer, is considering reducing nickel ore production to support prices, which have declined by 40% over the past two years due to oversupply. The government is reviewing mining quotas to stabilize the market while balancing economic dependencies. Indonesia eyes nickel production cuts to support price of ‘unloved’ metal

Agricultural Commodities: Coffee and Cocoa

Coffee prices have reached new all-time highs, surpassing US¢400 per pound on the New York exchange. This surge is driven by concerns over coffee availability, lower stocks in Brazil and consuming countries, and expectations of a lower-than-expected yield for Brazil’s 2025/26 crop. Weekly Commodity Summary

Cocoa futures prices continue to rise amid concerns over the 2024/25 crop in West Africa. Excessive rainfall in major cocoa-producing countries has intensified worries about supply for the upcoming season. Weekly Commodity Summary

Market Outlook

The World Bank forecasts a significant decline in global commodity prices over the next two years, expecting a 12% drop in 2025 and a further 5% in 2026, returning to pre-COVID-19 levels. This projection is based on weakening global growth and rising trade barriers. World Bank sees commodity prices falling to pre-COVID levels

In summary, commodity markets are navigating a complex environment marked by geopolitical tensions, economic policy shifts, and supply-demand dynamics. Stakeholders should remain vigilant and adaptable to these evolving factors.