Commodities show leadership as hard assets outperform an unsettled macro landscape

This breadth stands in stark contrast to equities, where leadership remains narrow, and to crypto, which—instead of offering an alternative to traditional investments—increasingly has become a proxy for the general level of market risk appetite, especially the tech- and AI-focused stocks concentrated in the Nasdaq 100 index. Investors seeking diversification, downside protection, or simply something grounded in actual physical supply-demand dynamics continue to rediscover the commodity space as an alternative, leading to speculation that the sector could be at the start of a new supercycle driven by multiple forces, as highlighted in a slide from my current presentation to clients. The most important being:

• Deglobalisation, defence, and de-dollarisation: sanctions, trade wars, export restrictions, reshoring supply chains
• Decarbonisation: renewable energy infrastructure and energy-efficient technologies—going green requires a lot more materials
• Surging power demand: data centres (AI), cooling (climate change), and EVs to underpin demand for copper, aluminium, natural gas, and uranium
• Debasement: a reduction of a currency’s real value through excessive money creation that erodes its purchasing power (fiscal stability)
• Demographics: population growth across emerging markets continues to drive rising consumption and commodity-intensive urbanisation
• Ongoing underinvestment in long-cycle projects after a decade of low prices

Precious metals: hard assets retake the safe-haven crown

Silver’s 8.5% surge has made it the week’s standout performer, marking an impressive turnaround from last month’s 15% correction. The move has been supported by a blend of macro‑driven demand, persistent physical tightness, and renewed interest from hedge funds and other leveraged accounts caught off guard by the metal’s swift recovery toward record territory. Silver has benefitted from gold’s strength while using its own thinner liquidity profile to outperform.

Gold’s near 4% rise reflects the broader and renewed rotation into real assets. With US fiscal dynamics deteriorating again—spending commitments rise while tax receipts fall—and with the shutdown having left a temporary fog over the economic picture, gold has become the default hedge. Note, the interest expense on US national debt rose to a record USD 1.24 trillion in the last 12 months, more than doubling over the past four years. The US government now spends more money on interest than it does on national defence. In addition, a softer dollar and a tentative recovery in ETF accumulation reinforce this trend.

Energy: geopolitics interrupts the glut narrative

Both Brent and WTI remain rangebound, with support forming near USD 60 and USD 55, respectively. Earlier in the week, prices tumbled after OPEC’s latest monthly report flipped its third‑quarter projection from a 400,000-barrel daily deficit to a 500,000-barrel surplus. The revision—alongside forecasts from other agencies pointing to a deeper surplus into 2026—prompted speculation that the long‑anticipated overhang had finally arrived. Those pressures eased, however, when geopolitics returned to the forefront following a Ukrainian drone attack on Russia’s Black Sea port of Novorossiysk, a major export artery for both crude and grains.

The short‑term setup remains dominated by oversupply, with months of rising OPEC+ output and steady non‑OPEC growth lifting inventories heading into winter. Even so, downside risks are partly offset by shrinking OPEC spare capacity as Saudi Arabia and the UAE lift production, reducing the buffer against future disruptions. Flows from sanctioned producers—Russia, Iran, and Venezuela—also remain a wildcard, while firmness in refined products such as diesel and jet fuel continues to support crude through resilient crack spreads.

The longer‑term narrative has become incrementally more supportive. The IEA now warns that natural declines could erode around 5.5 million barrels per day of capacity annually unless new projects are sanctioned. Brent in the USD 60s may feel comfortable for consumers, but such levels do little to incentivise largescale, capital‑intensive developments. With global demand expected to keep rising until 2050, the gap between perceived abundance and underlying supply resilience could define the next cycle.

For now, the focus remains on near‑term softness—ample supply, modest demand, and cautious OPEC+ management—but the emerging imbalance between supply and demand underpins our view that crude could become one of 2026’s more contrarian opportunities. Once the current surplus clears and inventories normalise, the market will need to reprice the true cost of future supply.

Industrial metals: the Santa Clara parable and the copper bottleneck

No part of the commodity space better illustrates the tension between the physical economy and digital optimism than copper. While prices have not matched the fireworks seen in precious metals, the structural case continues to strengthen. Santa Clara, California—the beating heart of Silicon Valley—now finds itself with newly built, multibillion-dollar data centres sitting empty as the grid cannot yet supply the power required to operate them.

The irony is hard to miss. Nvidia’s chips are ready to train trillion-parameter models, but the sockets they would plug into remain dark. The bottleneck is not silicon—it is copper, transformers, transmission lines, permitting, construction lead times, and the physical limits of grid expansion. Demand for electricity is exponential. Supply—in copper, concrete, steel, and grid reinforcements—is linear. Mathematics alone argues for a structurally supportive environment for copper over the next decade.

For now, copper may struggle breaking to fresh record highs after China’s economic activity cooled more than expected in October, and after Freeport‑McMoRan said it had partially resumed operations at the Grasberg mine in Indonesia following September’s accident‑related shutdown. Global inventory levels also remain ample in the near term. Beyond 2026, however, the picture shifts: supply is increasingly at risk of falling short of the accelerating demand linked to electrification, data‑centre build‑outs and broader grid reinforcement needs.

Grains and oilseeds: Black Sea worries and the return of the WASDE

The Novorossiysk attack triggered an immediate spill‑over into the grains market, lifting wheat futures on concerns about export disruptions from one of the region’s key hubs, while soybeans also extended their recent rally, reaching a 17‑month high ahead of the US Department of Agriculture’s long‑delayed World Agriculture Supply and Demand Estimates (WASDE) report—the first since the federal shutdown.

Industry surveys point to lower US yields for both corn and soybeans, while updated export data may offer a clearer view of Chinese demand, which has been difficult to assess during the blackout. US officials say China pledged to purchase 12 million tonnes of US soybeans over November and December, but uncertainty persists over how much of that commitment has actually been executed.

These developments, combined with short‑covering from hedge funds, have helped drive a strong rebound in the Bloomberg Grains Index over the past month, flipping its year‑to‑date performance from an 8% loss to a modest gain. The last available positioning data—published on 23 September before the shutdown—showed hedge funds holding sizeable net‑short positions across the six major US grain and oilseed futures. Once CFTC reporting resumes, significant adjustments are likely to be revealed given the 43‑day blackout period.