Rising Tensions Boost Precious Metals and Energy Sector

As the global commodity markets look forward to 2026, optimism surrounds precious metals, particularly gold and silver. On January 14, Daniel Hynes, the Senior Commodity Strategist at ANZ Bank, expressed a positive outlook for these metals following their strong performances in 2025. Factors such as escalating geopolitical tensions, debates on the independence of the US Federal Reserve, and concerns over the US’s fiscal discipline are directing funds towards gold as a reliable safe haven.

What is Driving Silver’s Volatility?

The tightening of physical supply is a significant factor causing volatility in the silver market. Temporary exemptions on US import tariffs might slightly lessen supply pressures, yet the demand-supply imbalance, coupled with strong industrial consumption, ensures that silver prices remain solid. ANZ Bank anticipates that gold prices might exceed $5,000 per ounce in the latter half of the year.

Will Geopolitical Risks Impact Energy Prices?

Yes, geopolitical risks are becoming more significant in the energy market. Oil prices have surged to a two-month high due to US President Donald Trump’s increasing tensions with Iran. His backing of Iranian protests and the breakdown of communication with Tehran have heightened fears of a US intervention.

The threat of supply disruption from Iran could endanger up to 3.5 million barrels per day, with approximately 2 million barrels impacting global markets. The US’s imposition of a 25% tariff on countries trading with Iran has intensified concerns around supply. Additional challenges include adverse weather conditions in Kazakhstan and maintenance problems that have drastically cut exports from the Caspian Pipeline Consortium terminal.

North Asian LNG prices are also affected by increased demand expectations. A cold spell in parts of China, Korea, and Japan has bolstered demand, with China reporting an 8% year-on-year increase in LNG imports in December. However, robust domestic production and pipeline deliveries may constrain further growth. In Europe, the ongoing Iran tensions are leading to anticipations of higher future gas prices due to intensifying competition with Asia for LNG.

Lithium and other crucial minerals have seen a rise as the G7 deliberates on supply chain security. Under France’s leadership, discussions on minimum pricing and recycling quotas have provided market support. Meanwhile, base metals trade began to slow, with aluminum falling back and copper holding its ground near record highs. Tin, however, captured attention with a gain exceeding 3%.

Gold prices faced a slight decline from record highs after disappointing inflation data, though demand as a safe haven persists. The unexpected weakness in core inflation in the US leads to expectations of a potential interest rate cut by the Federal Reserve later this year. Yet, the strengthening US dollar is exerting short-term pressure on gold. Silver continues to operate at historically high levels due to ongoing supply shortages.

“The imbalance between silver supply and demand, along with strong industrial demand, has established a solid foundation for its pricing,” said Daniel Hynes.