In the context of volatile commodity prices at the end of January, the group of precious metals, oil and industrial metals still recorded an increase in the whole month. As volatility gradually cools down, gold and other key commodities will continue to be supported by positive fundamental factors, according to Dominic Schnider, Head of Commodity & CIO Foreign Exchange APAC at UBS Wealth Management.
Precious metal prices, despite fluctuations, increased in January as political, geopolitical and economic incertitudes boosted safe-haven demand" - Mr. Schnider wrote in a commodity market update released on Monday. He also noted that copper prices set new records at the end of January before entering the accumulation phase, while oil prices were supported by short-term supply disruptions in the US and Kazakhstan, along with the weakening of the USD and tensions in the Middle East.
According to Mr. Schnider, as the recent wave of volatility gradually subsides, UBS believes that the fundamentals of gold and many other important commodities are still very solid.
We expect gold prices to resume their upward momentum, possibly reaching 6,200 USD/ounce by mid-year, supported by demand from central banks and investors, large budget deficits, lower US real interest rates and geopolitical risks" - he said - "We also forecast that the supply shortage of copper and aluminum will continue, thereby supporting prices in the medium term, while structural drivers such as the electrification process will support long-term demand.
Mr. Schnider believes that investors who do not hold gold in their portfolios should consider adding, while those who already have a large proportion of gold should consider diversifying to other commodities.
For investors who tend to prefer gold, we believe that a moderate ratio can help increase diversification and create a buffer against systemic risks" - he wrote - "For investors who have allocated a lot to gold and are making not-so-significant profits, expanding to commodities such as copper, aluminum and agricultural products can help diversify future sources of profit.
We believe that commodities will play an increasingly important role in the 2026 investment portfolio, thanks to their diversification capabilities in the context of supply-demand imbalances, geopolitical risks and the global energy transition" - Mr. Schnider emphasized - "We prefer widespread access to commodities and continue to appreciate gold, considering it an attractive defensive tool".
Mr. Schnider's forecast of 6,200 USD/ounce marks a sharp increase compared to the view just a month earlier. On January 5, he once said that central bank buying activity, increased fiscal deficit, lower US interest rates and geopolitical risks would push gold prices up to 5,000 USD/ounce by the end of Q1.
Commodities will play a more prominent role in the 2026 portfolio" - he reiterated - "In this asset group, we see many opportunities in copper, aluminum and agriculture, while gold is still a valuable portfolio diversification tool".
He believes that tight supply and increased demand will continue to support the prices of many commodities in 2026, and believes that the upward momentum of gold will continue this year.
In our view, gold still has room to increase in price, backed by central bank buying, large budget deficits, low US real interest rates and prolonged geopolitical risks" - he concluded.
