Global Commodity Markets Face Turbulence Amid Geopolitical Tensions and Trade Policies

As of March 17, 2025, global commodity markets are experiencing significant volatility influenced by geopolitical tensions, trade policies, and supply chain disruptions. Key developments include surging gold prices, fluctuating oil markets, and challenges in the agricultural sector.​

Gold Prices Surge Amid Market Uncertainty

Gold prices have reached unprecedented highs, with futures surpassing $3,000 per troy ounce for the first time. This surge is attributed to investor anxiety driven by U.S. President Donald Trump’s trade war with global allies, causing economic uncertainty and fears of inflation. The stock market has concurrently slumped, with the S&P 500 down over 5% for the year. Analysts predict that gold prices may continue to rise, although precious metals are known for their volatility. ​

The escalating trade tensions have prompted investors to seek safe-haven assets, with gold being a traditional choice during periods of economic instability. The movement of gold from London to New York reflects traders’ concerns over potential tariffs and the logistical challenges involved due to different gold bar standards in the two markets. ​

Oil Markets React to Sanctions and Demand Concerns

Oil futures closed higher, marking the first weekly gain for U.S. crude prices in eight weeks. This increase is driven by tighter U.S. sanctions on Iran and Russia, which are expected to potentially disrupt global crude supplies. Despite support from sanctions, oil prices are still pressured by a bearish forecast from the International Energy Agency, which cut its estimates for oil demand growth. ​

The International Energy Agency (IEA) has warned that souring macroeconomic conditions resulting from new U.S. tariffs and retaliatory measures could further depress demand. In response, the IEA has revised its oil demand growth estimates for the last quarter and the current quarter slightly downward. ​reuters.com

Agricultural Commodities Under Pressure

The European Union’s sanctions against Russia have overlooked a significant source of revenue for the Kremlin: fertilizer exports. In 2024, these exports to the EU surged by over 33%, reaching 6.2 million tonnes worth €2.2 billion, contributing an estimated €550 million in tax revenue to Russia. Poland remains the largest buyer. The war-induced energy crisis led to a reduction in the EU’s domestic fertilizer production, creating a gap that Russian producers quickly filled. ​

Texas farmers, predominantly Trump supporters, are becoming increasingly concerned about the impacts of the growing trade war initiated by President Trump through tariffs on foreign goods. The Texas Farm Bureau, despite initially supporting Trump, acknowledges that continued tariffs are harming agriculture by significantly decreasing demand for U.S. agricultural products overseas. Key markets like China and Mexico have retaliated with their own tariffs, notably affecting cotton and grain sorghum prices and export prospects.​

These developments underscore the interconnectedness of global commodity markets and the significant impact of geopolitical events, trade policies, and supply chain dynamics on commodity prices and availability. Market participants should remain vigilant and adapt strategies accordingly to navigate this complex landscape.​