Gold remains an important portfolio component

Prof Dr Bernd Meyer and team provide an outlook for the third quarter of 2025 in the current Horizon publication.

Horizon | Capital market outlook

Commodities

Upside potential for crude only if Middle East escalation persists

As a result of “liberation day” and the introduction of unprecedented tariffs, the oil price came under significant pressure at the beginning of the second quarter. This was due to concerns about a global recession, which have depressed the price of North Sea Brent crude by around 13% since 2 April. In addition, the announcement by OPEC+ to increase production by a further 411,000 barrels per day in June and July, due to overproduction by some cartel members such as Kazakhstan and Iraq, weighed on prices. In fact, the cartel is probably also pursuing the goal of regaining lost market share and meeting Trump’s interest in a lower oil price. Despite the recent rise in oil prices as a result of the escalation of the Middle East conflict, we expect oil prices to fall again in our base scenario. However, if Iran actually closes the Strait of Hormuz, as already approved by parliament, which would affect 20% of global oil and 30% of LNG supplies, oil prices are likely to remain higher for the long term.

OPEC+ attempts to regain lost market share

Brent oil price per barrel (in USD) and OPEC market share (in %)

Time period: 01/01/2005–17/06/2025
Source: Bloomberg, own calculations

Rising government debt and central bank purchases support gold

Gold was unable to escape the widespread sell-off on the financial markets following the introduction of reciprocal tariffs at the beginning of April. However, temporary growth concerns, a weaker dollar and fears of a sharp rise in government debt in the US counteracted this, and supported the gold price in the second quarter. Continued strong demand from central banks, ongoing geopolitical tensions and the rising US budget deficit, which is increasingly calling into question the sustainability of US debt, are likely to continue to support the gold price in the medium term, alongside a further weakening of the dollar and a neutral positioning to date.

Central banks are likely to further increase their gold reserves

Percentage of gold reserves in total central bank assets

As of: 31.03.2025
Source: World Gold Council; *Western Europe, **Russia before 2022Backer, Bloom & Davis, Bloomberg

Industrial metals caught between conflicting customs policies

The announcement of reciprocal tariffs and the associated fears of slower growth led to sharp price losses on industrial metal markets, with copper losing up to 15% of its value at times. Despite the new tariffs on steel and aluminum imports, some industrial metals recovered quickly. This was due to advance demand triggered by concerns that the tariffs would be extended to other metals and by low inventories. Although US trade policy remains a driving factor and a noticeable economic upturn is needed for a sustained positive price trend, structural demand remains unbroken due to the green transformation and increased infrastructure and defence spending, and should continue to support industrial metal prices in the medium to long term.

Tariff shock weighs on industrial metals

Development of nickel, aluminium, zinc, copper, tin, and lead in-dexed to 100 on 1 January 2024

Time period: 01/01/2024–17/06/2025
Source: Bloomberg, own calculations

Author

Mirko Schmidt
Multi Asset Strategy & Research Analyst