Gold Will Shine in Bearish Year Ahead for Commodities, ING Says

According to ING Groep NV, the outlook for commodities in the coming year appears bearish, largely due to rising tensions between the United States and China. These geopolitical stresses are expected to create headwinds for various energy and commodity markets.

Tensions Impacting Markets

As the U.S. considers tariffs against its trading partners, particularly China, there is a potential for retaliatory actions that could disrupt markets for oil, metals, and agricultural products. This uncertainty is paired with a desire for stimulus measures from China aimed at boosting consumption, which traders are closely monitoring.

Gold’s Bright Outlook

Despite the expected challenges faced by other commodities, gold is anticipated to shine brightly. ING forecasts that gold prices will continue to rise amidst heightened geopolitical concerns, predicting an average price of $2,760 per ounce in 2025, up from approximately $2,713 now. This increase in demand is expected primarily from central banks diversifying their reserves, alongside the growing appeal of gold as a safe haven during turbulent times.

Commodity Price Predictions

Overall, ING anticipates a decline in prices across many parts of the commodities complex, forecasting that crude oil prices, represented by Brent, may average around $71 per barrel next year, down from about $74. With the growth of non-OPEC oil supplies, pressure on crude prices is expected. Additionally, the export of liquefied natural gas (LNG) from the U.S. is likely to increase domestic demand while softening gas prices in Europe if a mild winter occurs.

Concerns for Industrial Metals

The outlook for industrial metals appears less optimistic, considering factors like trade dynamics, possible alterations to U.S. climate legislation under President Biden, and fluctuating Chinese demand. For instance, the price of copper is projected to be around $8,900 per ton in 2025, down from its current price of over $9,200.

Agricultural Challenges

Grains are anticipated to be heavily influenced by any trade disputes, and adverse weather conditions are likely to exert further pressure on soft commodities. Prices for cocoa and coffee, in particular, are expected to remain volatile as the market navigates these challenges.

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