FICC | Commodities

Renewables’ role in power-hungry data centers is overstated. Natural gas will fill clean electricity’s data center supply shortfall, particularly in the US and Europe.

Special Report

The fact that the yellow metal’s rally has defied headwinds from key cyclical drivers suggests that the bull market is structural, not cyclical. Buy gold and gold mining stocks in absolute and relative terms.

Copper’s unwind – triggered by the refined metal’s US tariff exemption – isn’t over yet. We remain short the red metal on an absolute basis and relative to gold.

U.S. copper tariffs will redirect the metal’s trade flows from the US to the rest of the world, replenishing depleted inventories abroad. With global copper demand set to soften in H2, the red metal will likely face downward price pressure outside the US. Stay long gold / short LME copper, and initiate an outright LME copper short.

An update on the key themes and views that will shape commodity markets through the remainder of 2025.

The escalating Israel-Iran conflict has boosted oil prices. We are positioning for further geopolitical escalation, uncertainty, and the economic fallout through two strategies that benefit from both near- and long-term upside.

Investors should hold gold, build up some cash, tactically overweight US equities relative to global, and prepare for at least minor oil supply shocks – possibly major shocks – as the Israel-Iran war escalates.

Investors often rely on past relationships to predict future outcomes. This strategy is at risk now that several commodity correlations have broken down. We explore the causes and sustainability of the new commodity relationships.

Oil, copper, and gold futures curves have recently experienced abnormal shifts and twists. Brent is no longer fully backwardated, copper curves on the LME and CME have diverged, and gold is in a steep contango. We examine the drivers and implications of these shifts for prices and curve structure across the three commodities.

OPEC+ recently announced another outsized oil production hike, tripling its planned June output increase to 411k b/d for the second consecutive month. Our take on why KSA is boosting crude output at a time of heightened downside demand risks is that it is pursuing an oil price war lite. President Trump is not only blessing this strategy but also depending on it.