Commodities finish the week on a high as indices falter

Why Is Gold in Focus Right Now?Throughout early 2025, gold has surged to record highs, breaching $3,400 an ounce for the first time in history. For newer traders, this may seem like a “blue-sky” breakout without precedent. For experienced market participants, it raises a more practical and important question, i.e. what is driving this rally, and is it sustainable?Understanding the fundamental and technical context behind such moves helps us not only trade the present but plan for what may come next, which can guide us in the decisions we make with our trading action.This article aims to build upon recent outlook webinars that we have delivered recently, which have waved the bullish flag throughout. However, I must admit to having been surprised at the velocity of the rally.We will try to unpick key drivers as well as analyse what could be next and why.What’s Driving the Gold Rally in 2025?Let’s take a look at the main contributing factors that are currently supporting the upward momentum in gold prices:1. Rising Global Uncertainty and Geopolitical RiskPolitical instability, as it has historically, remains a strong macro backdrop for gold. Recent flare-ups in geopolitical conflict — particularly in Eastern Europe and the Middle East — have returned “safe haven” flows back into focus. This is typical during periods when traditional risk assets like equities face greater downside volatility.Additionally, the somewhat turbulent start (even more so than many predicted) to the new U.S. administration has introduced an element of policy uncertainty, particularly around trade, inflation and the impact of economic growth. The possibility of further tariffs or fiscal tightening reinforces gold’s appeal as a form of protection.Key Point: Traders need to monitor not just existing conflicts, but also the market perception of risk. Gold often responds not to what is happening, but to what investors fear might happen.2. US V China – trade war brewing?Tariff dramas have been the major market chatter and sentiment changer over the last few weeks. On top of general broad international tariffs, and to pause or not to pause decisions, the major attention is, and likely to continue to be, the escalation of tariffs between the U.S. and China has pushed inflation expectations higher. While inflation has generally cooled since its 2022–2023 peaks, cost-push factors such as tariffs can reintroduce price pressures, particularly on imports.Central banks globally are including tariffs within a rate decision narrative, but no central bank is more in focus, of course, than the Federal Reserve. In Trump's last presidency, the current Fed chairman Jerome Powell came under fire for rate policy, and already, it was noteworthy that the current president aimed a shot at him once again. The market is aware that inflationary shocks are not off the table once tariff impact starts to bite at importer costs in the US, and the “priced in” rate cut that is likely to occur in June is still some time away, and the certainty that this may happen may start to waver. Gold has historically performed well when real yields (interest rates adjusted for inflation) fall or remain negative.Key Point: Watch CPI data closely. If inflation expectations start to climb again due to trade-related costs, gold may continue to benefit.3. U.S. Dollar WeaknessThe U.S. dollar index (DXY) has declined to multi-year lows, making gold more attractive to non-U.S. investors. This is a classic inverse relationship — as the dollar falls, gold often rises.A weaker dollar could potentially indicating that the market could be pricing in a more dovish Federal Reserve, with rate cuts potentially on the table later in the year, However, more likely in this case, the dramatic drop in the USD, which this week hit 3 year lows, is more likely due to concerns about growth and even the perceived chance of recession.At the time of writing, the earnings season is ramping up, and despite Q1 results so far being relatively positive, we are already seeing concerns expressed (as is often the case with uncertainty) relating to forward guidance. This, of course, plays into the slowdown narrative. This week's PMI data feels as though it may have even more importance than usual.Key Point: Gold traders should always include USD direction in their macro framework. It often amplifies or suppresses broader trends in the metal.4. Central Bank and Institutional DemandAnother major support for gold is the persistent demand from central banks, particularly in emerging markets such as China and Turkey. These institutions are increasingly shifting reserves into gold as part of long-term diversification away from USD assets.Evidence suggests ETF flows have also picked up, showing increasing but not outrageous levels, suggesting the move is still institutional in nature rather than purely speculative.Key Point: As long as institutional and central bank demand remains steady or rising, gold has a structural reason to be supported underneath current price levels.What the Technical Picture Is Telling UsWhile fundamental drivers continue to support gold, the technical setup also tells an important story — one that can help traders decide whether to stay in, take partial profits, or prepare for tactical re-entries after any price pullback. Let’s explore the technical picture in a bit more detail.

• Gold’s Long-Term Trend Structure Remains Intact

Gold has been making a consistent series of higher highs and higher lows since mid-2023. This trend has been confirmed across multiple timeframes, including the daily and weekly charts — an important feature for position traders.Currently, price is well above both the 50-day and 200-day exponential moving averages (EMA), which have now turned upward and widened — a classic sign of trend strength and directional bias. When prices pull back in strong trends, these EMAs often serve as dynamic support levels.

• Momentum: The weekly RSI is elevated (above 75), which suggests gold may be in overbought territory in the short term.

What About RSI Being Overbought?One of the most common misunderstandings among newer traders is how to interpret an elevated RSI (Relative Strength Index), particularly when it crosses above the traditional 70 level.RSI above 70 does not automatically mean 'sell' — especially in strong trends, so this merits a little further discussion.Here’s why a high RSI may not be a problem:

1. Context matters: In trending markets, RSI can remain elevated (above 70 or even 80) for extended periods without any meaningful pullback. This is often referred to as a 'momentum breakout' condition.
2. Confirmation from volume: If rising RSI is accompanied by increased volume, it suggests that momentum is being supported by participation, not exhaustion. Currently, weekly volume has expanded on breakout weeks, supporting the move.
3. New highs with RSI > 70 are actually bullish: A strong market making new highs and registering overbought readings usually reflects strength, not vulnerability — unless divergence begins to appear.

Key Point: Use RSI as a momentum gauge, not a reversal trigger in isolation. In this case, RSI supports the idea that gold is strong, not yet stretched to the point of reversal.

• Next Targets: Many technical analysts are watching $3,500 and $3,650 as key psychological and Fibonacci extension levels. A sustained break above $3,400 would likely bring these into view.
• Support Levels: If price retraces, $3,200 and $3,050 are likely areas where buyers may step back in, especially if the macro story remains intact.Key Point: Momentum remains strong, but even in trending markets, corrections are normal. Having a plan for where to re-engage is just as important as knowing when to stay out.
• What Would a Healthy Pullback Look Like?

Even the strongest trends pause. If gold does retrace in the short term, the nature of the pullback is more important than whether it happens.Signs of a healthy pullback include:- Controlled decline in decreasing volume- Price respecting prior breakout zones — e.g., $3,250–$3,280- Holding dynamic support like the 20-day or 50-day EMA- Reversal candle patterns near support (e.g., hammer, bullish engulfing)Key Point: In strong markets, pullbacks are often shallow and short-lived. They can be opportunities to scale in, provided the structure remains intact.Sentiment and Positioning: Are Traders Too Bullish?It’s important not to get swept up in price action alone. The COT (Commitments of Traders) report can provide valuable insight into whether markets are approaching overly crowded levels.

• Large Speculators have increased their net long positions, but not yet at levels seen in major historical peaks.
• Retail traders have only recently started to increase exposure, which suggests the move is not fully mature.
• ETF inflows, while rising, are still below the aggressive flows seen in 2020.Key Point: Current positioning suggests there may still be room to run, especially if new catalysts emerge. However, if positioning becomes too lopsided, be ready for faster and sharper corrections.

What Could Change the Narrative….Risks to Watch?Even with a strong bull case, traders must stay aware of what could derail gold’s momentum:Risk Event #1: Sudden USD reboundImpact on Gold: Could trigger a sharp pullbackRisk Event #2: Hawkish Fed surpriseImpact on Gold: Logically higher real yields = bearish gold due to USD impact – however, gold’s role as an inflation risk is likely to offset this.Risk Event #3: De-escalation of trade/geopolitical tensionsImpact on Gold: Safe-haven demand may soften if this is part of the reason for the current price rise. However, with other factors predominating price moves for right now, again, this may not be critical.Risk Event #4: Profit-taking and reversal in momentumImpact on Gold: Could create a short-term topKey Point: Risk doesn’t always mean reversal — but it does mean adjusting trade size, stops, and expectations when conditions change.Summary: Stay Informed, Stay DisciplinedGold’s rise in 2025 has been impressive, but it hasn’t been irrational. The macro backdrop, institutional support, and technical structure all support the trend.However, markets rarely move in straight lines, and traders should stay ready for both continuation and correction scenarios.Success is likely to lie in applying consistency in the management of profit and capital risks, as well as having a clear method to re-enter as appropriate. consistently while remaining adaptable to changing conditions.Traders should view the current gold move as a reflection of persistent macro themes and technical support rather than any sort of “bubble”. Whether you’re already long or waiting for a retracement, your decision-making should be rooted in having a clear and unambiguous trading plan and, of course, the discipline of follow-through in the actions you take.

We would suggest that right now Markets are underestimating the impact of April 2 US Reciprocal Tariffs – aka Liberation Day monikered by the President.There is consistent and constant chatter around what is being referred to as The Dirty 15. This is the 15 countries the president suggests has been taking advantage of the United States of America for too long. The original thinking was The Dirty 15 for those countries with the highest levels of tariffs or some form of taxation system against US goods. However, there is also growing evidence that actually The Dirty 15 are the 15 nations that have the largest trade relations with the US.That is an entirely different thought process because those 15 countries include players like Japan, South Korea, Germany, France, the UK, Canada, Mexico and of course, Australia. Therefore, the underestimation of the impact from reciprocal tariffs could be far-reaching and much more destabilising than currently pricing.From a trading perspective, the most interesting moves in the interim appear to be commodities. Because the scale and execution of US’s reciprocal tariffs will be a critical driver of commodity prices over the coming quarter and into 2025.Based on repeated signals from President Trump and his administration, reinforced by recent remarks from US Commerce Secretary Howard Lutnick. Lutnick has indicated that headline tariffs of 15-30% could be announced on April 2, with “baseline” reciprocal tariffs likely to fall in the 15-20% range—effectively broad-based tariffs.The risk here is huge: economic downturn, possibilities of hyperinflation, the escalation of further trade tensions, goods and services bottlenecks and the loss of globalisation.This immediately brings gold to the fore because, clearly risk environment of this scale would likely mean that instead of flowing to the US dollar which would normally be the case the trade of last resort is to the inert metal.The other factor that we need to look at here is the actual end goal of the president? The answer is clearly lower oil prices—potentially through domestic oil subsidies or tax cuts—to offset inflationary pressures from tariffs and to force lower interest rates.‘Balancing the Budget’Secretary Lutnick has specified that the tariffs are expected to generate $700 billion in revenue, which therefore implies an incremental 15-20% increase in weighted-average tariffs. We can’t write off the possibility that the initial announcement may set tariffs at even higher levels to allow room for negotiation, take the recently announced 25% tariffs on the auto industry. From an Australian perspective, White House aide Peter Navarro has confirmed that each trading partner will be assigned a single tariff rate. Navarro is a noted China hawk and links Australia’s trade with China as a major reason Australia should be heavily penalised.Trump has consistently advocated for tariffs since the 1980s, and his administration has signalled that reciprocal tariffs are the baseline, citing foreign VAT and GST regimes as justification. This suggests that at least a significant portion of these tariffs may be non-negotiable. Again, this highlights why markets may have underestimated just how big an impact ‘liberation day’ could have.Now, the administration acknowledges that tariffs may cause “a little disturbance” (irony much?) and that a “period of transition” may be needed. The broader strategy appears to involve deficit reduction, followed by redistributing tariff revenue through tax cuts for households earning under $150K, as reported by the likes of Reuters on March 13.The White House has also emphasised a focus on Main Street over Wall Street, which we have highlighted previously – Trump has made next to no mention of markets in his second term. Compared to his first, where it was basically a benchmark for him.All this suggests that some downside risk in financial markets may be tolerated to advance broader economic objectives.Caveat! - a policy reversal remains possible in 2H’25, particularly if tariffs are implemented at scale and prove highly disruptive and the US consumer seizes up. Which is likely considering the players most impacted by tariffs are end users.The possible trades:With all things remaining equal, there is a bullish outlook for gold over the next three months, alongside a bearish outlook on oil over the next three to six months.Gold continues to punch to new highs, and its upward trajectory has yet to be truly tested. Having now surpassed $3,000/oz, as a reaction to the economic impact of tariffs. Further upside is expected to drive prices to $3,200/oz over the next three months on the fallout from the April 2 tariffs to come.What is also critical here is that gold investment demand remains well above the critical 70% of mine supply threshold for the ninth consecutive quarter. Historically, when investment demand exceeds this level, prices tend to rise as jewellery consumption declines and scrap supply increases.On the flip side, Brent crude prices are forecasted to decline to $60-65 per barrel 2H’25 (-15-20%). The broader price range for 2025 is expected to shift down to $60-75 per barrel, compared to the $70-90 per barrel range seen over the past three years.Now there is a caveat here: the weak oil fundamentals for 2025 are now widely known, and the physical surplus has yet to materialise – this is the risk to the bearish outlook and never write off OPEC looking to cut supply to counter the price falls.

Copper is a crucial industrial metal, often seen as a barometer of global economic health. Therefore, movements in copper price are not only interesting to buyers/sellers of copper related assets, but also the market as a while. Its pricing is influenced by a complex interplay of supply and demand dynamics, macroeconomic conditions, and geopolitical factors.

As we move through 2025, various factors are shaping the outlook for copper prices, both in terms of headwinds that could suppress prices and tailwinds that may drive them higher. This article aims to summarise these key influences and offer some insight into what could happen next with the “king of base metals”. How is Copper Priced?

Copper prices are primarily determined by the London Metal Exchange (LME) and COMEX (Chicago Mercantile Exchange), where futures contracts set benchmark pricing. Several factors influence these prices of which the following five have most impact, Supply and Demand Fundamentals – The balance between mining production and industrial consumption directly impacts copper prices as with all metals. A surplus of supply, compared to that which is expected, typically results in lower prices, while deficits drive prices higher.

Demands on copper are driven not only by manufacturing activity directly but factors that may influence this either directly or indirectly. Macroeconomic Conditions – Economic growth, particularly in major industrial nations, fuels demand for copper in construction, manufacturing, and technology sectors. A slowdown can lead to reduced demand and lower prices.

Trade and Geopolitical Factors – Government policies, tariffs, and trade restrictions influence global copper flows. Political instability in key producing regions can cause price volatility. Market Speculation – Hedge funds and institutional investors frequently trade copper futures, leading to price fluctuations based on speculative trends rather than fundamental supply-demand factors.

Currency Movements – The U.S. dollar’s strength or weakness significantly affects copper prices. A strong dollar makes copper more expensive for non-dollar buyers, suppressing demand, whereas a weaker dollar can boost copper purchasing power internationally. Current Copper Price Trends and Forecasts Copper prices have experienced notable volatility in early 2025, influenced by macroeconomic developments and industry-specific factors.

As of February 2025, key price forecasts and trends include: Cochilco (Chilean Copper Commission) projects an average copper price of $4.25 per pound ($9,370 per metric ton) for 2025, driven by supply constraints and steady demand. Goldman Sachs has revised its copper price forecast downward from $15,000 to $10,100 per metric ton ($6.85 per pound), citing weaker-than-expected Chinese demand, particularly in the construction sector. Analysts' Consensus: Despite a relatively wide variance in thinking, c opper prices are expected to rise around 3% in 2025, though risks remain due to macroeconomic uncertainties, supply chain disruptions, and fluctuating demand in key markets.

Stock Levels and Supply Trajectory Global copper stock levels are a key indicator of market balance. LME Copper Stocks: Recent reports indicate a decline in LME copper inventories, which had dropped to approximately 110,000 metric tons in early 2025. This suggests tightening supply conditions, which could push prices higher if demand remains strong.

Shanghai Futures Exchange (SHFE) Stocks: Stock levels have remained relatively stable at around 160,000 metric tons, but these reserves could trend lower if China’s industrial demand rebounds more strongly than expected. Global Supply Trajectory: Declining ore grades, unexpected production halts, and political instability in key producing countries are creating a supply squeeze. Mining operations in Chile and Peru, which together account for over a third of global copper output, have reported disruptions due to labour strikes and environmental regulations.

Major Copper Producers and Users Some knowledge of the major countries that both mine copper and use copper is a key part of quick recognition of potential alterations in any current supply and demand trajectory as events and changes in policy may have a profound impact on either, and of course for those countries who export copper, any change may have broader economic consequences. Top Copper Producing Countries Chile – The largest global producer, responsible for ~27% of world output. Major companies include Codelco, Antofagasta, and BHP.

Peru – Supplies approximately 10% of global copper, with key producers like Southern Copper and MMG contributing significantly to global supply. China – Although a major importer, China also has significant production capacity and is expanding domestic mining operations. United States – Copper production from Arizona, Utah, and New Mexico helps meet domestic demand, though reliance on imports remains high.

Democratic Republic of Congo (DRC) – Rapidly expanding production, largely driven by investments from Chinese companies, has made the DRC a key global supplier. Top Copper Consuming Countries China – The largest consumer, accounting for ~50% of global demand, with high usage in infrastructure, electrical grids, and consumer electronics. Alterations in economic health and growth can have significant impact not only regionally, but globally, in terms of copper pricing United States – Strong demand from construction, defence, and renewable energy projects continues to drive copper consumption, although the latter in the medium term may reduce due to a policy shift in sourcing energy from the new administration European Union – Major economies like Germany, France, and Italy are key consumers, particularly in automotive manufacturing and industrial production.

Japan & South Korea – Heavy usage in semiconductor production, automotive industries, and advanced manufacturing. Tailwinds: Factors Supporting Increased Copper Prices Several key factors are expected to provide support for copper prices in 2025: Energy Transition & Green Technology The growth of electric vehicles (EVs), solar energy, and battery storage solutions is boosting long-term copper demand. Despite a potential pullback in US investment in renewable energy projects there is little slowdown elsewhere with other economies at this stage, Government policies supporting the shift to clean energy infrastructure in the decades ahead are increasing the need for copper wiring and components.

Infrastructure Spending Massive investments in transportation, power grids, and urban development in the U.S., China, and Europe are pushing demand higher. The electrification of rural areas and expansion of broadband networks further contributes to increased copper consumption. Supply Constraint Mining disruptions due to labour strikes, environmental concerns, and logistical issues in South America are tightening supply.

Although copper is re0usable as a commodity, recycling programmes are anecdotally not bringing supply levels higher to significantly impact on price (although companies involved in such activities are logically likely to be beneficiaries). Declining ore grades require higher investment in extraction and processing, which could drive costs and prices higher. Global Economic Recovery The global economy continues to stabilise, after what seems like a prolonged period of concerns about recession, and central banks generally loosen interest rate policy further.

Both of these support a probability of industrial production and construction activity resurgence, leading to stronger demand for copper-based products. Headwinds: Risks and Challenges for Copper Prices Despite these positive factors, several risks could weigh on copper prices: China’s Slowing Demand The country’s struggling real estate sector and slower-than-expected industrial recovery are reducing copper imports. To date a lack of aggressive stimulus from Beijing could keep demand lower than forecasted although market leaders are suggesting that further stimulus is inevitable throughout 2025.

Whether there is a more proactive approach than there has been so far remains to be seen but is news worth keeping an eye on over the course of the next few weeks and months, Trade Policy and Tariffs The U.S. has imposed new tariffs on Canada, Mexico (although these have been paused for the interim), and China, increasing uncertainty in the global copper market. With Europe and other economies in the Trump administration crosshairs, the inflationary impact on the US and the likelihood of retaliation high, these could both impact on economic growth and disrupt copper supply chains and alter trade flows. Stronger U.S.

Dollar A rising dollar makes copper more expensive for international buyers, potentially leading to lower global demand. The USD has seen a pullback recently but with the obvious impact of inflation and subsequent pausing in interest rate cuts likely (currently no rate cut is expected in the US until May at the earliest), a bullish UDS could return. Substitutes & Technological Advances Innovations in aluminium wiring, superconductors, and alternative materials could reduce copper’s dominance in key industries.

A detailed discussion on this is beyond the scope of this article but those interested in a longer term position in copper related assets would be well advised to explore this further. Summary Copper prices in 2025 are expected to remain volatile, shaped by a mix of bullish and bearish factors. While supply constraints and growing demand from green energy initiatives may provide upward pressure, economic uncertainty, trade policies, and a potential slowdown in Chinese consumption pose risks.

Our feeling, in light of this discussion above, is the bullish case slightly outweighs the impact of headwinds but this may be fragile for the next quarter whilst the impact of a new US administration and global growth prospects for the year become clearer. Whether you are a copper futures CFD trader, investor in copper related stocks or simply someone who recognises the importance of copper of investment strategies as a whole, logically you should closely monitor global economic trends, mining output levels, stock inventories, and policy changes that could impact the copper market in the coming months. Of course feel free to tune into constant updates at our regular market updates and education sessions.