The year 2024 proved to be a tough and challenging one for major commodities. Brent crude oil hit a high of approximately US$90 per barrel in the second quarter but has since declined to around US$75 per barrel. Similarly, copper, often considered a gauge of global economic health, reached a peak just shy of US$11,000 per tonne in Q2 before dropping to the US$9,000 per tonne range by December.
In contrast, gold continues to thrive amidst economic and geopolitical uncertainties, maintaining its strong performance as we head into the new year. The price volatility of both Brent crude and copper reflects an increasingly complex and difficult environment for the global economy.
While initial optimism surrounded the latest round of stimulus, investors are now recognising that China’s economic recovery faces significant hurdles. The country still needs to address the heavy debt burden in its property sector. Meanwhile, consumer and investor confidence in China has yet to see substantial improvement, resulting in weak retail spending growth and a continued contraction in the money supply. China’s already fragile economy faces additional strain from the looming threat of higher trade tariffs under a second Trump administration.
Europe’s growth outlook also remains under pressure. The ongoing Russia-Ukraine conflict has forced eurozone countries to significantly increase fiscal spending on collective defense. This rising debt burden comes as Germany and France—the eurozone’s traditional industrial leaders—hover near recession. France has recently experienced a sovereign credit rating downgrade due to escalating budgetary and political crises. Unsurprisingly, the European Central Bank has responded by aggressively cutting interest rates, reducing its benchmark refinancing rate from 4.5 per cent at the beginning of 2024 to 3.15 per cent by December.
The outlook for 2025 appears challenging for both Germany and France. In Germany, the upcoming federal election in February could further heighten economic uncertainty.
Trade Tariffs Cast a Shadow
The dynamics in the global energy market have shifted significantly, particularly for Brent crude oil. OPEC is struggling to stabilise crude oil prices and maintain its market share, having ceded much of its influence on the United States.
With daily production reaching approximately 13.5 million barrels, the U.S. has firmly established itself as the world’s largest crude oil producer. This surge in production began during the first Trump administration and expanded further under Biden’s term. In contrast, Saudi Arabia, constrained by production cuts, currently produces only nine million barrels daily—roughly 50% less than the U.S.
Compounding this, weakening economic growth in both China and the eurozone has led OPEC to repeatedly revise down its global energy demand forecasts. This persistent threat of oversupply continues to depress Brent crude oil prices.
Copper Reflects Economic Malaise
Known as “Dr. Copper” for its ability to gauge economic health, copper prices closed 2024 just under $9,000 per tonne, signaling further economic strain in 2025. Copper’s performance remains highly sensitive to China’s industrial slowdown, with weak activity levels contributing to rising copper inventories on major global exchanges.
Adding to the challenges, copper inventories have surged on major global exchanges such as the London Metal Exchange (LME) and the Shanghai Futures Exchange (SHFE). This rise in stockpiles suggests that consumption has not matched production levels, creating a supply glut that is weighing heavily on prices. The widening cash spread discount in copper markets—a condition where spot prices trade significantly lower than future prices—further underscores weak immediate demand and bearish sentiment.
The outlook for copper remains clouded by China’s uncertain trajectory. The metal’s price is particularly vulnerable to any further signs of economic stagnation in the world’s second-largest economy. If China fails to implement effective stimulus measures or resolve its structural issues, such as its property market crisis and high debt levels, copper prices could see continued downward pressure.
Looking ahead to 2025, the bearish sentiment reflects not only the immediate challenges facing the global economy but also uncertainty over trade policies under the second Trump administration. Higher tariffs on Chinese goods or disruptions to global trade could further suppress demand for industrial metals like copper.
Nevertheless, global transition to renewable energy and the growing adoption of electric vehicles (EVs) are expected to drive substantial demand for the metal over the coming decades. While these trends are unlikely to provide immediate relief, they highlight copper’s critical role in the green energy transition and its potential for a significant rebound once economic conditions stabilize.
What’s next for Brent Crude and Copper
While the short-term outlook for both Brent crude oil and copper appears bleak, the medium- to long-term perspective could shift.
For Brent, the futures curve remains flat, indicating that geopolitical risks, especially in the Middle East, may not be fully reflected. Any potential escalation in regional conflicts could impact supply and influence prices.Similarly, copper faces a looming supply deficit over the medium term. Ageing mines are unlikely to meet growing demand fueled by the green energy transition and the rising adoption of electric vehicles.
Gold Continues to Shine
In contrast, gold has thrived amid global economic and geopolitical uncertainties, rallying nearly 30% in 2024 from $2,000 per ounce in January to $2,600 per ounce by year-end.
Key drivers of this strength include sustained central bank purchases—particularly in emerging markets and Asia—and robust retail demand for physical gold and jewelry. Both trends are motivated by diversification needs amid rising geopolitical tensions and uncertainty surrounding the U.S. dollar.
Diverging Prospects in 2025
The year ahead will see divergent outcomes for Brent crude oil, copper, and gold. Brent and copper are likely to face headwinds from slowing growth in China and Europe, along with uncertainties tied to higher trade tariffs under the Trump administration.
Conversely, gold is expected to remain a standout performer, benefiting from persistent demand for safe-haven assets in an environment of heightened geopolitical and economic risks.
In summary, 2025 may be shaping up to be a year of divergence for key commodities. While Brent crude oil and copper face challenges from a slowing global economy and trade disruptions, gold is positioned to thrive as investors seek refuge in the face of uncertainty. For market participants, the year ahead underscores the importance of diversification and a keen focus on navigating the complex dynamics shaping the global commodities market.
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