Metals lead commodities in 2025, but industrial outlook turns cautious

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Metals have emerged as the top-performing commodity sub-asset class of 2025 so far, with precious metals up 26.2% and industrial metals rising 10.9% year-to-date as of July 22.

However, looking ahead to the rest of the year, BMI maintains a neutral to bearish outlook for industrial metals, citing expectations of weakening demand.

This is primarily due to subdued consumption in China and a slower global growth outlook for 2025, with downside risks to the global economy remaining elevated.

"While further trade deals are likely to be announced before the August 1 deadline, reducing trade policy uncertainty, higher tariff rates would place additional pressure on the global economy," the brokerage said.

Growth in China, the world’s largest metals consumer, is likely to face mounting headwinds over the next few quarters from US tariff uncertainties and the waning impact from the consumer goods trade-in program that has boosted retail sales.

On a positive note, a weaker US dollar is likely to provide support for metal prices in the second half of the year, allowing metals to hold up given their inverse relationship with the greenback and keeping any losses contained, BMI analysts noted.

As for precious metals, gold prices are currently hovering around $3,346/oz (XAUUSD:CUR [https://seekingalpha.com/symbol/XAUUSD:CUR]), having risen by 2.8% month-to-date as of July 22, boosted by safe-haven demand, a weaker US dollar, and improved investor appetite amid prospects of a more dovish Fed.

The brokerage recently maintained 2025 gold price forecast at an annual average of 3,100/oz and remain neutral towards prices for the coming months.

It expects the US Fed's rate cut announcements later in 2025 and 2026 to hold the key to gold price increases going forward.

Additionally, BMI expects gold to continue benefiting from increased central bank purchases and uncertainty surrounding the Trump administration’s trade policy shifts, which it says, will place a floor under bullion.

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