Commodity markets in the whirlwind of global politics
October brought interesting developments on the commodity markets. Ongoing trade tensions between the USA and China kept the pulse racing. China tightened export controls on rare earths, to which Washington responded with new punitive tariffs of up to 100% on Chinese imports. This boosted the price of gold and briefly caused the stock markets to tremble. The question remains as to how long the superpowers can afford to trade blows and whether the commodity markets can free themselves from the spell of the trade conflict
Is the gold bull market running out of steam?
Rarely before has the development of the gold price been subject to such a heterogeneous set of driving forces as it is today. Whereas the gold price was once primarily dependent on the development of interest rates and inflation, it is now shaped by a complex interplay of geopolitical uncertainty, central bank policy and capital flight. Until recently, central banks, especially from emerging markets, supported the price through record purchases with the aim of "de-dollarizing" their reserves. This type of demand has now paused.
But where central banks are stepping back, institutional investors are taking over the role of price drivers. After a prolonged phase of outflows, gold ETFs have seen significant inflows again since May 2024 (Reuters, 08.07.2025). This is not a short-term speculative trend, but a structural movement: Funds and asset managers are increasingly using physically backed products as a liquid means of hedging portfolios against inflation risks, geopolitical uncertainties and currency volatility. This development shows that gold is once again being perceived as a strategic anchor of stability, although increased fluctuations and corrections should be expected in the foreseeable future.
In the short term, however, the gold market appears to have entered a phase of overheating. Demand for jewelry in India and China, which account for around half of physical gold consumption, is showing signs of weakening. Nevertheless, there is still a lot to be said for continued support: every political escalation and every monetary policy uncertainty acts like a spark in the powder keg of gold demand.
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Industrial metals defy the economic downturn
Copper, known as an economic barometer, has seen a marked recovery since the summer. This development was driven less by demand trends and more by increasing supply disruptions. Production shortfalls in Chile, Indonesia and the Democratic Republic of the Congo have already reduced supply for 2026 by around 300,000 tons (Reuters, 08.10.2025). The shortfalls correspond to around a quarter of the annual production of the world's largest copper mine, Escondida in Chile. Added to this are falling ore grades and growing safety risks in mining.
At the same time, stocks on the London Metal Exchange remain at historic lows. This shortage is also reflected in the price structure: the market is in "backwardation". This is the term used to describe a situation in which the current spot price is higher than the forward contract prices. Such a situation signals acute supply bottlenecks.
On the demand side, the dynamic remains surprisingly robust. The trend towards electrification, driven by electromobility, grid modernization and the expansion of data centers, is creating structural demand. Investors are beginning to take a closer look at the sector again - especially copper, which is considered a key raw material in the energy transition.
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Oil market facing stress test
The oil market is currently in a balancing act. On the one hand, rising production volumes and growing inventories are putting pressure on prices, while geopolitical tensions are keeping upward pressure on the other. In Russia, recent drone attacks on refineries have put over one million barrels of daily capacity out of operation. This makes diesel and petrol more expensive in the short term, while more unprocessed crude oil is exported. This ultimately leads to downward pressure on the price of crude oil.
China plays a key role in this. The country imports around three quarters of its oil requirements and has recently purchased large quantities to fill strategic reserves. These purchases serve less as short-term speculation than as a long-term hedge against currency and supply risks. Should Beijing curb its buying spree, the market could quickly tip into oversupply.
Uncertainty also remains within OPEC+: Actual exports are well below the agreed quotas. It remains to be seen whether this is due to a lack of capacity or whether there is a calculation behind it. Overall, the downside risks prevail in the short term, including declining demand, seasonal factors and additional production from the USA. Oil thus remains a commodity whose price is determined more by geopolitical factors than by market forces.
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Good harvest year depresses agricultural prices
In the agricultural sector, record harvests and favorable weather conditions are exacerbating the downward pressure on prices. The US agricultural sector recently reported high expected harvests of corn, wheat and soybeans, but demand remained subdued. China, traditionally the most important buyer of US soybeans, is increasing its purchases in South America and is currently sourcing the majority of its imports from Brazil and Argentina. For American exporters, this means falling sales and growing inventories. At the same time, many farmers are holding back their harvests in anticipation of government aid payments, which is further distorting the market supply.
Sugar and cocoa are also trending lower, while the price of coffee has received a short-term reprieve due to trade diversions. Although the new US tariffs on Brazilian beans are causing prices to rise temporarily, this effect is unlikely to be sustained.