Material Matters: Oil, Gold, Copper, And More

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A glance through the latest expert views and predictions about commodities: crude oil; gold; copper; iron ore; uranium; lithium.

By Greg Peel

Crude Oil

For the past two years, global benchmark Brent crude oil has traded in a tight range with the two-year US Treasury yield, Morgan Stanley notes, which has behaved like a proxy for US growth and investors’ expectations for Fed monetary policy.

The positive correlation between oil prices and US growth expectations reflects the deep market skepticism currently weighing on crude oil prices.

Amid greater-than-ample supply, the market has focused on signals tracking real-time growth expectations for the US, the world’s largest consumer of oil, and demand from China, the world’s second largest consumer, which remains below trend given persistent economic softness.

The Brent crude oil forward curve, which tracks future price expectations, paints a similar picture, with the level of prices expected in the next couple years resetting sharply lower over the past few months, with just a modest rebound expected beginning in 2026.

OPEC-Plus had been cutting production capacity since late 2022 to support prices and counter demand weakness in China and Europe, along with increased non-OPEC production.

OPEC-Plus has reduced capacity by a “hefty” -1.7 million barrels per day (mb/d), but non- OPEC countries have more than offset that decline with a 2.4 mb/d boost, with the US driving over half of that increase, incentivised by relatively lower breakeven costs.

Historically, OPEC’s spare capacity has served as the quickly available “shock absorber” in cases of supply disruptions or demand spikes. This recent buildup in spare capacity has dampened crude oil’s price response to rising geopolitical risk, in a similar manner to the dynamic observed during the US’ invasion of Iraq in 2003, when oil prices did not spike given high spare capacity.

Now OPEC-Plus has pivoted to boosting production.

When priced in gold terms, Brent crude oil trades at one of its lowest levels in nearly 100 years outside of the covid era, Morgan Stanley points out, reflecting deep skepticism amid elevated OPEC spare capacity and strong non-OPEC production. As a result, oil is trading like a cyclical, dominated by tariff-driven uncertainty and softness in China’s economy.

These factors have dampened oil’s traditional response as a geopolitical hedge. Morgan Stanley expects an oil market surplus by the fourth quarter that increases into 2026, with the Brent oil price falling to the mid-US$50s per barrel by the first half of 2026.

Gold

Gold’s recent rally, driven largely by trade uncertainty, is losing steam now US-China trade tension has become less ominous. ANZ Bank analysts believe a strong catalyst would be required to push prices beyond their recent record high.

Heightened global trade uncertainty has been driving gold’s rise toward US$3,500/oz. While noise around US tariffs persists, ANZ believes the market will gradually become desensitised to new announcements. As this occurs, macro-economic data are likely to take over as the primary catalyst.

Market expectations of the level of US tariffs have settled at 10-15%, which is still historically high. The impact of the higher tariffs on US imports is beginning to filter through to economic growth and inflation data, raising the risk of stagflation.

ANZ expects the Fed to resume interest rate cuts in the September quarter, with a total of -75 basis points of easing anticipated in this cycle. While the inverse relationship between gold and interest rates broke down during the rate-hiking phase, ANZ believes renewed rate cuts will support gold.

In addition, structural concerns particularly mounting US debt and the resulting erosion of confidence in US assets will enhance gold’s appeal as a risk diversifier. This dynamic is also expected to sustain central bank purchases and institutional investment.

Central bank gold buying is likely to remain robust though the analysts do not see this contributing to overall growth in demand for gold, rather, investment flows will be the next major driver of price appreciation, with current lean positioning evidence there is room for increased exposure.

In the short term, the gold price is likely to consolidate before staging another rally toward US$3,600/oz by year end, on ANZ’s projection. Longer term, the analysts expect gold to peak later in 2025, followed by a gradual decline in 2026 as economic growth prospects improve and global trade uncertainty diminishes.

A rapid breakthrough in trade negotiations or a significant improvement in the US economic outlook are key downside risks to this view.

RBC Capital has increased its 2025/26 gold forecasts to US$3,163/oz (+5% vs prior) and US$3,489/oz (+12% vs prior), respectively. RBC’s outlook is for range-bound gold prices in the second half of 2025 versus current prices of circa US$3,350/oz (+28% year to date), but further upside is expected over 2026.

RBC maintains a positive view on the gold mining sector, given attractive valuations and improving capital allocation trends. RBC has included among its global list of preferred gold names Bellevue Gold ((BGL)) and Westgold Resources ((WGX)).

Copper

Copper is up 11% year to date to circa US$4.37/lb, RBC Capital notes, as flows of metal into the US ahead of a potential copper tariff (matching existing steel and aluminium tariffs) have left other markets tight. The year started with strong demand meeting strong supply, while both have shown signs of weakening recently.

Chinese copper demand was up 4.5% in the March quarter as manufacturing was strong ahead of potential tariffs, although May purchasing managers’ indices (PMI) showed a contraction, which underscores the near term risks from the trade war. The backdrop for demand can improve if trade tensions ease but obviously, notes RBC, that remains the biggest “if”.

The supply side has also shown signs of faltering with the recent outage at Ivanhoe Mines’ Kamoa-Kakula project in Central Africa and Chile’s copper commission reducing its 2025 supply growth estimate to 3.0% from 4.6%. Putting these together, RBC sees potential for a deficit market in the second half of 2025, which can support higher prices; although the near term economic outlook remains clouded by trade tensions.

In a recent commodity update, RBC increased its 2025 copper price estimate to US$4.31/lb from US$4.10/lb and maintained a 2026 estimate of US$4.50/lb and US$5.00/lb from 2027-2029 and $4.00/lb long term from 2030.

RBC cites only two preferred global copper plays, one of which is Capstone Copper ((CSC)).

Other Minerals

RBC Capital has revised down its 2025 iron ore forecast by -1% to US$97/t as supply disruptions dissipate and impacts of Chinese stimulus and steel reform are digested. RBC forecasts a decline in global demand, anchored by Chinese real estate sector headwinds. RBC maintains 2026-2029 forecasts and makes no change to long-term forecasts for iron ore of US$75/t.

RBC cites only two preferred global iron ore plays, one of which is Champion Iron ((CIA)).

The recent sector update sees growing uranium demand from significant nuclear capacity expansion, and expects the supply response could be challenged. RBC recently revised its long-term price forecast to US$100/lb post-2035 to incentivise new production necessary to meet rising demand.

RBC reduced its 2025 lithium chemical forecasts slightly (carbonate prices -3% versus prior, hydroxide -5%), namely on better-than-expected supply, owing to a restart of Chinese battery giant CATL’s lepidolite production, increasing Chilean supply, and weaker demand. RBC maintains its 2026-2029 prices and makes no change to long-term forecasts.

RBC’s preferred lithium equity exposure is Pilbara Minerals ((PLS)).

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