Commodities are poised for a rebound in 2025 as macroeconomic challenges that hindered growth in 2024 become supportive tailwinds, according to Wells Fargo analysts. Elevated interest rates and economic uncertainties weighed on prices in the first three quarters of 2024. However, conditions shifted in the fourth quarter, leading to modest gains.
The Bloomberg Commodity Total Return Index rose 4.5% year-to-date as of December 26, with supply constraints keeping prices relatively stable. Analysts noted that while demand remained subdued due to global economic headwinds, this trend is expected to improve in 2025, potentially driving prices higher. They warned that limited production growth over the past two years could create supply shortages if demand outpaces expectations.
Precious metals, particularly gold, and energy sectors are projected to perform strongly, with both anticipated to deliver gains exceeding 10%. Gold ended 2024 on a volatile note, influenced by Federal Reserve policies and rising bond yields. Despite these pressures, gold surged 27% annually, closing the year at $2,625 per troy ounce. Wells Fargo analysts forecast gold prices to reach $2,700-$2,800 per ounce in 2025, supported by potential Fed rate cuts.
Energy markets are also expected to benefit from a stronger global economy. West Texas Intermediate crude oil is projected to trade between $85 and $95 per barrel, while Brent crude is forecast at $90-$100 per barrel. Oil prices fell by 3% in 2024, partly due to a sluggish recovery in global demand, but analysts believe improving conditions will drive renewed growth.
As supply and demand dynamics shift, 2025 could mark a turning point for commodities, creating opportunities for investors.