(Kitco News) – While commodity prices were volatile at the end of January, precious metals, oil, and industrial metals all posted gains for the month, and as volatility subsides, gold and other key commodities will enjoy supportive fundamentals, according to Dominic Schnider, Head of Commodities & APAC Forex CIO at UBS Wealth Management.
“Precious metals prices, while volatile, rose in January as political, geopolitical, and economic uncertainties drove ‘safe-haven’ demand,” Schnider wrote in a commodity update on Monday. He also noted that copper hit a record high in late January before consolidating, while oil prices were boosted by short-term supply disruptions in the U.S. and Kazakhstan, along with dollar weakness and Middle East tensions.
Schnider said that as the recent volatility continues to subside, UBS believes the fundamentals for gold and other key commodities remain supportive.
“We see gold resuming its climb, rising as high as USD 6,200/oz by mid-year, supported by central bank and investor demand, large fiscal deficits, lower real US interest rates, and geopolitical risks,” he said. “We project further supply shortages for copper and aluminum that should support prices over the medium term, while structural drivers (e.g., electrification) underpin long-term demand.”
Schnider suggested investors with no gold in their portfolio would do well to add some, while those holding a substantial amount consider diversifying into other commodities.
“For investors with an affinity for gold, we believe a modest allocation can enhance diversification and buffer against systemic risks,” he wrote. “For investors with substantial allocations and significant unrealized profits in gold, broadening commodity exposure to include copper, aluminum, and agricultural assets can help diversify sources of future return in our view.”
“Commodities are set to play a more prominent role in portfolios in 2026, in our view, offering diversification amid supply-demand imbalances, geopolitical risks, and the global energy transition,” Schnider said. “We like broad commodity exposure, and continue to favor gold, which we see as an attractive hedge.”
Schnider’s $6,200 per ounce price forecast represents a major upgrade from where he saw the yellow metal just one month ago. On Jan. 5, he wrote that central bank buying, growing fiscal deficits, lower U.S. interest rates, and ongoing geopolitical risks would propel gold prices to $5,000 by the end of the first quarter.
“Commodities are set to play a more prominent role in portfolios in 2026,” Schnider wrote. “Within the asset class, we see particular opportunities in copper, aluminum, and agriculture, while gold remains a valuable portfolio diversifier.”
He said that tight supply and rising demand will likely support higher prices for many commodities in 2026, and that he expects the gold rally to continue this year. “Gold should post further gains, in our view, supported by central bank buying, large fiscal deficits, lower US real interest rates, and ongoing geopolitical risks,” he said.
