The past year has witnessed a striking divergence in global commodity markets, with gold prices reaching new heights, oil exhibiting a rollercoaster ride, natural gas emerging as a surprising star, and industrial metals reflecting mixed fortunesMeanwhile, soft commodities like cocoa and coffee have navigated the agricultural landscape to emerge remarkably resilient.

As we step into a new year, major institutions have updated their forecasts for commodity futuresThe global economic outlook remains uncertain, coupled with a strong dollar expectation, suggesting that commodities as a whole might face pressure in 2025. Nevertheless, precious metals like gold and natural gas continue to attract optimism, while oil and copper hinge on the prospects of global economic recoveryIn contrast, delicate fluctuations in pricing and demand for cocoa and coffee could be on the horizon.

Oil’s trajectory appears unsettlingly bleak.

Throughout last year, oil prices grappled with sluggish demand from key consuming nations paired with oversupply issues, compelling the OPEC+ alliance to repeatedly delay its production resumption plans

Market analysts are bracing for continued headwinds for oil prices in 2025.

A report from ING Group underscores the substantial pressures on oil this year, revealing widespread concern over the demands and oversupply outlook for 2025. It highlights that even with OPEC+ members opting to postpone restoration of voluntary production cuts, the market could still be poised for oversupply, with surpluses projected to shrink from over a million barrels per day to about half a million.

The Commonwealth Bank of Australia anticipates that Brent crude oil prices will plunge to approximately $70 per barrel this year, as the expected rise in oil supply from non-OPEC+ nations is overshadowing growth in global oil consumption.

According to the latest forecasts by Bank of America, the average price for Brent crude oil in 2025 could rest at $65 per barrelThis projection implies a significant increase in crude production from non-OPEC countries, potentially exerting immense pricing pressure on OPEC+, which is already grappling with deteriorating fiscal situations stemming from dwindling oil revenues.

Conversely, natural gas seems to be basking in a favorable light.

Last year, European natural gas prices surged over 30%. A subsequent wave of frigid weather exacerbated seasonal supply and demand concerns, further inflating gas prices.

As supply from the Far East dwindled, European and global natural gas prices skyrocketed, prompting the European Union to actively seek alternative sources—importing liquefied natural gas (LNG) from the United States, Qatar, and Australia to bridge the gap left by Russian gas supply cuts and expediting the development of renewable energy technologies, albeit with a continuing rise in energy costs.

Experts predict that American LNG will further make inroads into the European market

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Currently, the U.Sis exporting gas to Europe from eight LNG facilities, positioning itself as the leading global gas supplier; however, this surge may disrupt domestic demandAdditionally, U.Snatural gas futures saw a staggering rise of over 10% earlier this week.

Citi has indicated that the cold weather expected for the remainder of winter in America and Asia might sustain elevated natural gas prices.

According to Fitch's research arm BMI, driven by increasing demand for LNG and growing pipe net exports, U.Snatural gas prices could rise by about 40% in 2025, potentially reaching $3.4 per million British thermal unitsThey assert, “LNG will continue to propel new consumption, fueled by rising exports and strong European and Asian demand.”

The question looms: can gold challenge the unprecedented $3,000 mark?

Last year marked a record-breaking performance for gold, showcased by its best annual results since 2010. Insights from FactSet reveal that, spurred by purchases from central banks and retail investors, gold prices surged around 26% during 2024, reaching a milestone of $2,800.

The World Gold Council's recently published report on gold demand trends noted a notable 5% year-over-year increase in total global gold demand, hitting 1,313 tons in Q3, a first for surpassing the $100 billion mark

Notably, gold exchange-traded funds (ETFs) emerged as a “new force,” recording net inflows of 95 tons over a three-month span—the first instance since early 2022. The World Gold Council further underscores that if the Federal Reserve continues to lower interest rates, interest in ETFs is expected to stay buoyant.

Investment firms BullionVault and JPMorgan forecast gold prices will escalate to $3,000 per ounce by 2025. BullionVault’s research chief highlighted, “Investors are optimistic about gold and silver in 2025 due to their pessimism concerning geopolitical tensions and government debt,” emphasizing the role of gold as a risk hedge.

However, Goldman Sachs downgraded its 2025 gold price target, revising it from $3,000 to $2,910 per ounceThey predict that gold prices may only reach the $3,000 mark by mid-2026, reflecting concerns over lower-than-expected Fed interest rate cuts

Goldman cites the interplay between declining speculative demand and increasing central bank purchases as a crucial factor in keeping gold prices fluctuating within a set range while central bank buying becomes a pivotal force supporting long-term gold price stability.

Copper faces an uncertain demand outlook.

Turning to copper—often regarded as a barometer for the global economy and an essential component in electric vehicles and grid manufacturing—prices rose by 8% last yearHowever, following its historical high in May, concerns over oversupply dampened copper futures performance in the latter half of the year, with copper inventories registered at major exchanges exceeding 500,000 tons for the first time in four years in July.

BMI noted, “In light of policy shifts in the U.S., energy transitions might decelerate, possibly hindering the supportive ‘green sentiment’ for prices in 2024.”

John Gross and Company, a metals consultancy, indicates that the toxic combination of high inflation, elevated interest rates, and a strong dollar will exert pressure on metal markets, including copper.

Furthermore, analysts at Commerzbank noted that cyclical commodities in the industrial segment are facing a generally negative sentiment among investors as the market awaits clearer signs of a recovery in consumption.

The outlook for cocoa and coffee remains uncertain amid their remarkable price resilience.

Soft commodities like cocoa and coffee have been leading the market for the second consecutive year, influenced by adverse climatic conditions and tight supply from primary growing regions

Prices for both commodities have soared to historic peaks.

According to analyst Hansen from Saxo Bank, the production of soft commodities has struggled to meet the surging demand this yearCoffee and cocoa are typically cultivated in narrow tropical bands, making them particularly susceptible to adverse weather, especially in powerhouse nations like Brazil and Vietnam, which together account for about 56% of global output.

ING Group suggests that there are no significant signs that the upward trend in cocoa prices has reached an endpoint, with the cocoa sales year 2023-2024 expected to culminate in the most considerable global supply deficit in nearly six decades.

Nevertheless, there’s speculation that continual price rises could dampen market consumption capabilitiesThe CEO of Nestlé, one of the world’s largest coffee producers, was dismissed last September due to board dissatisfaction over the loss of market share attributable to sluggish sales and soaring prices, pushing consumers towards cheaper alternatives.

Lastly, Rabobank predicts, “Given that these commodities are trading far above production costs, we anticipate an expansion of output next year, while demand will contract.”