Negotiations between the US and Iran continue to be the most important influencing factor for the commodity market in the short term. In the medium term, allocating a portion of the portfolio to commodities can help investors hedge against inflation risks and energy supply shocks, according to Giovanni Staunovo, commodity analyst at UBS.
In a report released on Monday, Mr. Staunovo said that volatility in the commodity market may remain high in the coming time, but these volatilities have contributed to a significant increase for the entire asset group.
Brent oil prices hit a four-year high of 126 USD/barrel on April 30, before falling to around 93 USD/barrel at the time of writing the report" - he said - "Meanwhile, gold prices are currently about 16% lower than the record high closing level in January.
According to Mr. Staunovo, the UBS CMCI Composite compound yield index in USD shows that the commodity group in general has increased by more than 20% since the beginning of the year.
Although the geopolitical risk compensation may gradually decrease, the fundamentals of oil, gold and basic metals are still supporting prices.
“Oil product inventories in many economies are at low levels and may force prices to rise further to curb demand before reserves are replenished," he said.
Regarding gold, the Swiss Banking Union (UBS) believes that the medium-term outlook remains positive thanks to the high global public debt burden, the prolonged budget deficit in the US and the trend of foreign exchange reserve diversification of central banks.
In addition, UBS forecasts that the copper and aluminum markets will continue to face supply shortages, thereby supporting prices in the medium term, while the electrification process of the economy continues to be a driving force for long-term demand.
Mr. Staunovo emphasized that UBS still prioritizes goods in 2026, and recommended an active management strategy.
“Goods can go through periods of strong volatility, but this is still a valuable asset group in the investment portfolio because history shows low correlation with stocks and bonds," he said.
However, last week UBS lowered its gold price forecast for the end of 2026 from $5,900 to $5,500/ounce due to concerns that US Treasury bond yields will remain high and the USD will continue to strengthen.
UBS experts Dominic Schnider and Wayne Gordon believe that investors are becoming more cautious with gold as yields remain high.
The market is once again paying attention to the opportunity cost. The non-interest-generating nature of gold becomes a more important factor when real interest rates are still high" - the two experts said.
According to UBS, demand from gold ETFs and the futures contract market has weakened significantly. Although recent capital flows show signs of stabilization, this level is still not enough to restore the strong upward momentum that appeared in the early 2026 period.
However, the Swiss bank does not believe that the long-term gold price increase cycle has ended. UBS experts still forecast that gold prices will end this year higher by about 1,000 USD/ounce compared to the current level.
Further, UBS believes that a more neutral monetary policy environment in 2027 could weaken the USD and help boost investment demand in gold.
Previously, in a report released on April 13, Mr. Giovanni Staunovo said that gold and oil are likely to continue to increase sharply even after the US-Iran conflict ends.
He recommended that investors holding a large proportion of gold should expand to other commodities to diversify profit sources.
Goods continue to have room to increase in price thanks to fundamental factors, supply-demand imbalances and prolonged geopolitical risks," he wrote.
He believes that if geopolitical instability persists while interest rate expectations fall, gold may still witness a significant rally in the medium term.
Notably, in a report on March 16, UBS commodity experts once predicted that gold prices could increase to 5,900-6,200 USD/ounce by the end of 2026.
According to UBS, the fact that gold has not been able to break out of the 5,200 USD/ounce zone since the US-Iran conflict broke out is not unusual.
History shows that in major conflicts, investors often prioritize liquidity or switch to energy assets instead of pouring money directly into gold," the report stated.
UBS cited that after the Russia-Ukraine conflict broke out in 2022, gold prices increased by about 15% but then decreased by 15-18% when the US Federal Reserve (Fed) raised interest rates. A similar scenario also occurred in the Gulf War and the Iraq War.
However, UBS still maintains an optimistic view on gold. Long-term factors such as increased global public debt, efforts to diversify foreign exchange reserves by central banks, and a downward trend in dependence on the USD will continue to support the outlook for the precious metal.
In addition, basic gold demand remains positive thanks to central bank purchases, investment capital flows and increasing demand for jewelry in Asia as people's incomes improve.
With global economic and political incertitudes, gold is still an effective portfolio diversification tool. Investors who tend to prefer gold can consider allocating at a few percent level in a diverse investment portfolio" - UBS concluded.
