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Key points in this update:

• The commodities sector is on track for a second weekly gain, with the Bloomberg Commodity Total Return Index up 5% so far this month
• While commodities typically rally during periods of robust economic growth, the current upswing is largely driven by geopolitical risks and investment demand for tangible hard assets - particularly for investment metals led by gold
• This week's gain was primarily due to haven demand for gold and a surging risk premium in crude oil in response to heightened geopolitical tensions following Israel’s latest attack on Iran.

The commodities sector is on track for a second weekly gain, with the Bloomberg Commodity Total Return Index up 5% so far this month, lifting year-to-date returns in USD above 8%. This performance significantly outpaces other US dollar-denominated assets, including bonds and equities, with both the S&P 500 and Nasdaq lagging well behind. This week's gain was primarily due to gold and crude oil strength in response to heightened geopolitical tensions following Israel’s latest and so far most aggressive attack on Iran.

While commodities typically rally during periods of robust economic growth, the current upswing is largely driven by geopolitical risks and investment demand for tangible hard assets—particularly for precious metals. Gold has led the charge for months, with silver and platinum recently joining the rally amid a potent mix of rising fiscal debt concerns, tariff-driven supply shocks, weakening consumer confidence, a softening labour market, and continued US dollar weakness. Developments that may soon prompt a dovish—and potentially stronger-than-expected—policy shift by the Federal Reserve. Adding to this the risk of higher inflation and central banks extending their gold-buying spree into a fourth consecutive year, the groundwork for a potential push toward USD 4,000 cannot be ruled out.

Gold rose together with the US dollar on Friday following the Israeli attack in a classic safe-haven move, while recent in-demand metals such as silver and platinum struggled to keep up. We doubt that the attack was the spark bullion needed to reignite the mentioned push towards and above USD 3,500. While we believe the upside remains the path of least resistance, a move higher needs the support from a deteriorating economic outlook driving down funding costs, especially in the US.

In the energy sector, prices have rebounded this month, initially buoyed by seasonal summer demand tightening supply. This has helped offset bearish factors such as rising OPEC+ output and macroeconomic uncertainties. What began as a steady recovery—partly fuelled by short-covering—turned volatile on Friday. Brent crude spiked as much as 13%, reaching USD 78.50 per barrel, after Israel launched a prolonged series of airstrikes on Iranian nuclear and ballistic missile facilities. Thereby reducing the chance of a negotiated solution between the U.S. and Iranwhich have centered almost exclusively on Iran’s rapidly advancing nuclear program, with the core objective of these talks to limit Iran’s nuclear activities—particularly uranium enrichment—in exchange for relief from US-imposed economic sanctions.

With Iran vowing to respond with missiles and drone attacks, the escalation has once again raised fears of broader conflict in a region responsible for a third of global oil output. Tensions around the Strait of Hormuz—through which over 20 million barrels of oil transit daily—are once again in focus. However, it is worth noting that no energy installations have been impacted by the Israeli strikes, so unless Iran decides to drag other nations, especially the US into the conflict, the risk of a supply disruption remains low and should over time reduce the risk premium currently priced into the market.

Once the geopolitical risk premium and short-term summer demand related tightness starts to fade, the market will once again turn its attention to rising OPEC+ output into the autumn months, as a group of eight OPEC+ members aggressively restores production in an effort to reclaim market share. The added barrels should, over time, temper price gains while raising concerns about a potential oversupply if demand growth stalls.

Meanwhile, industrial metals have been mostly flat this month. Gains in aluminium have been offset by weakness in other segments, particularly copper. Although copper has pulled back slightly, it remains up around 17% year-to-date. Prices continue to be supported by a wide price spread between US and international copper markets, as traders try to guess what level of tariffs the Trump administration eventually will apply on imports.

This price dislocation has prompted traders to ship metal to the US ahead of such tariff announcements, thereby draining exchange-monitored stockpiles in London and Shanghai, tightening supply even as demand remains under pressure from slowing global growth and ongoing trade tensions—especially between the US and China, the world’s largest consumer of copper.

Finally, apart from a few pockets of strength, most notably coffee and cattle, the agricultural sector remains under pressure from the prospect of another year of ample supply despite an increasingly volatile weather situation across the world. The Bloomberg Agriculture Subindex trades down on the month and close to unchanged on the year with broad losses across key crops and most softs being offset by recent coffee strength—now fading amid a Brazilian harvest progressing well, and not least the US meat market where import restrictions and a small herd have underpinned prices in recent months.

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Key points in this update:

• The Bloomberg Commodity Index was heading for its strongest weekly performance in five months, buoyed by broad-based gains—particularly in the energy and metals sectors
• Traders and investors continued to grapple with the uncertain global economic fallout from President Trump’s trade war
• Silver and platinum reach fresh cyclical highs, driven by momentum and their relative cheapness to rangebound gold.
• Crude holds firm despite growing supply glut risks

The Bloomberg Commodity Index was heading for its strongest weekly performance in five months, buoyed by broad-based gains—particularly in the energy and metals sectors. Notably, silver and platinum, often overlooked in mainstream investment portfolios, surged to fresh cycle highs, reflecting a growing investor appetite for tangible assets amid rising geopolitical and financial risks. This momentum came ahead of a closely watched US jobs report, which confirmed a weakening trend without falling off a cliff. Overall, incoming U.S. economic data will continued to add a layer of anticipation to an already volatile market landscape.

While silver and platinum topped the weekly commodities performance chart, posting returns close to 10%, on a year-to-date basis, silver is up 24%, while platinum has surged by 29%; other commodities also saw notable gains. Crude oil, in particular, performed surprisingly well. Both WTI and Brent crude prices rose approximately 4%, but overall continue to trade within well-established ranges. This rise came despite a fresh announcement from eight OPEC+ members of yet another bumper production increase, raising some concerns about an emerging supply glut in the second half of the year.

Oil markets appeared to shrug off the news, buoyed instead by renewed optimism following an agreement between US President Donald Trump and Chinese President Xi Jinping to resume trade talks. Additional upward pressure came from persistent supply disruption risks, particularly in Venezuela, Libya, Iran, and even Canada—where wildfires have caused temporary production slowdowns.

Copper also had a strong week, supported by robust demand, most notably in China, and rising supply constraints amid continued movement of copper to the US from the rest of the world. The New York traded high-grade contract benefited from a widening premium for US copper over London Metal Exchange (LME) prices, following the Trump administration's decision to double tariffs on imported aluminium and steel to 50%. The move is part of a broader effort to reduce America’s reliance on foreign imports, although it comes with the downside of higher costs across a range of sectors—from housing and automobiles to household goods and office supplies.

Moreover, copper prices remain underpinned by a significant drop in LME-monitored stockpiles, which have fallen 50% year-to-date. A recent inventory decline in Shanghai adds to the bullish momentum, even though some of this inventory drawdown reflects a relocation of supplies to US warehouses ahead of an expected tariff announcement.

In the agricultural sector, performance was mixed. Arabica coffee prices rebounded following a month-long correction from a record high, while short covering supported wheat in response to geopolitical tensions and weather risks. Together with ongoing strength across a US-focused livestock market, these gains helped offset persistent weakness in corn and sugar.

Elsewhere across financial markets, sentiment remained cautious. Traders and investors continued to grapple with the uncertain global economic fallout from President Trump’s trade war—an issue reignited despite a recent 90-day truce between the US and China. The US Court of International Trade had initially blocked the bulk of Trump’s sweeping tariffs, ruling them an unconstitutional use of emergency powers under the International Emergency Economic Powers Act. However, a federal appeals court subsequently granted a temporary stay, reinstating the tariffs pending further review. The legal whiplash added to global uncertainty, with markets unsure whether these aggressive trade policies will be ultimately upheld or struck down.

Compounding the unease, President Trump’s so-called “big beautiful bill”—a sweeping tax and spending package projected to add between USD 3 to USD 5 trillion to the national debt—has stoked fresh concerns over runaway deficits and rising inflation. The bill sparked a high-profile clash between Trump and Elon Musk, who called it a “disgusting abomination” that recklessly inflates the federal deficit. In response, Trump lashed out, branding Musk “crazy” and threatening to tear up key federal contracts and subsidies that benefit Tesla and SpaceX.

While some observers dismissed the feud as political theatre, it underscored the increasing dysfunction in Washington, where the administration appears more focused on picking fights than offering credible economic solutions. The broader consequence is growing investor anxiety about America’s fiscal and political stability. This uncertainty—combined with the increasing politicisation of American business—has begun to erode global confidence. As a result, investors are now demanding a premium to hold US government bonds, and the dollar remains under pressure despite a widening yield advantage over other sovereign debt markets.

These dynamics have further incentivised investors to diversify away from traditional financial instruments and toward tangible assets. Gold continues to be the primary haven, but with bullion demand showing signs of stalling as investors look for a fresh trigger to propel prices higher, we have instead in recent weeks seen heightened interest in silver, platinum, and to a certain extent also copper—all benefiting from tightening supply conditions. These commodities are viewed as politically neutral; unlike sovereign bonds or foreign currencies, they carry no counterparty risk and are not tied to any nation’s credit rating. This is precisely why gold remains a cornerstone of central bank reserves worldwide—and why other metals, supported by a tightening supply outlook, are now increasingly seen as a rational hedge against political and financial instability.

Silver breakout leaves gold trailing

Despite silver’s occasional volatility—especially relative to gold—the white metal has been on an upward trajectory since September 2022. While gold has garnered most of the attention, silver’s performance has been roughly on par, with both metals doubling in value during this period. However, unlike gold, which must break new record highs to continue its advance, silver remains well below its 2011 peak near USD 50, potentially offering room for further outperformance as investors hesitate to buy gold at record prices.

From a technical perspective, the break above USD 35 not only signals a 13-year high, it also reflects a break above the 0.618 Fibonacci retracement of the 2011 to 2020 downward move, potentially from a technical perspective not leaving much in terms of resistance before USD 40. However, with the initial move carrying the hallmark of momentum buying from speculators buying the break above resistance-now-support in the USD 35-area, the rally needs to extend further in order to reduce the risk of liquidation from recently established long positions.

Platinum rally resumes after brief, shallow pullback.

Platinum, which recently broke above USD 1,025—surpassing a long-term descending trendline that originated at the 2008 high of USD 2,300—resumed its ascent following a brief and shallow correction. An often-overlooked semi-industrial metal, which a decade ago traded on par with gold, before seeing its relative cheapness as seen through the gold-platinum ratio hit a record 3.6-to-1 last month. However, supported by fundamentals leading to the mentioned technical breakout, the metal has gained some traction these past few weeks, after the World Platinum Investment Council, in its latest Platinum Quarterly report, projected a third consecutive annual market deficit, with demand expected to outstrip supply by nearly one million troy ounces.

This anticipated shortfall, which will draw down existing above-ground inventories, is being driven by demand from the automotive sector and, notably, a surge in Chinese interest in jewellery, bars, and coins. Last month, China recorded its highest platinum imports in a year, spurred by the metal’s relative price stability and its significant discount to gold. The shortfall could accelerate if the current demand from investors continues, not least through demand for platinum-backed exchange-traded funds, which during the past two weeks have seen total holdings jump 111,000 ounces to a ten-month high at 3.29 million ounces.

Gold rangebound as traders pivot to silver; policy shift could fuel rally

Gold remains rangebound after a technical breakout above the downtrend from its April 22 record high of USD 3,500, failed to attract renewed and strong buying interest. Instead, traders have shifted their focus to silver and platinum. While we remain cautious about predicting an imminent surge to new all-time highs, the macroeconomic backdrop is increasingly supportive of precious metals. A potent mix of rising fiscal debt concerns, tariff-driven supply shocks, weakening consumer confidence, a softening labour market, and continued dollar weakness may soon prompt a dovish—and potentially stronger-than-expected—policy shift by the Federal Reserve. Combined with the risk of higher inflation and central banks extending their gold-buying spree into a fourth consecutive year, the groundwork for a potential push toward USD 4,000 cannot be ruled out.

Managed money positioning across key metals

In the latest reporting week ending May 27, speculators in the managed money category held net long positions across gold, silver, platinum, and copper. Platinum saw a notable buildup in speculative longs following a breakout, while positioning in the other metals remained relatively muted. This leaves ample room for accumulation once the technical and/or fundamental outlook becomes more favorable—as was the case with silver over the past week.

Meanwhile, the binary nature of the upcoming U.S. copper tariff decision—and the risk of a potential volatility spike following any announcement—continues to suppress speculative interest in copper. Nevertheless, traders are maintaining a cautiously bullish bias.

Crude holds firm despite growing supply glut risk

WTI and Brent crude oil continue to trade within a relatively wide USD 10 range, established after the sharp selloff in early April. This slump followed renewed concerns over President Trump’s trade war policies and an OPEC+ announcement to accelerate the unwinding of 2.2 million barrels per day (bpd) in voluntary production cuts. The move, seen as a response to overproduction by some members, was also aimed at gradually regaining market share from high-cost producers.

On the demand side, rising consumption of gasoline and distillates ahead of the peak summer season for driving and air conditioning has helped underpin the market. Meanwhile, several supply-side risks are offering additional short- to medium-term price support. These include recent wildfires in Canada threatening production, the risk of supply disruptions in Libya due to political unrest, and the recent revocation of Chevron’s license to operate in Venezuela—potentially impacting around 220,000 bpd of output. Additionally, persistent geopolitical tensions, including the Russia-Ukraine war and the looming threat of renewed US sanctions on Iran if nuclear talks break down, are keeping a floor under oil prices.

Brent crude, currently trading around USD 65.50, remains confined within a broad USD 58.50 to USD 68.50 range. In addition to the short-term supply risks previously mentioned, the recent price uptick has also been driven by buying activity from speculators who were caught off guard by the market’s resilience. However, once this momentum-driven buying exhausts itself, further upside is likely to remain capped, particularly as OPEC+ continues to add supply incrementally on a monthly basis.