Include an allocation to gold
Gold has been volatile since the start of the US-Iran conflict, with its perceived “safe-haven” appeal offset by investor liquidity needs, a stronger US dollar, and uncertainty over the US rate outlook. This pattern in gold mirrors previous geopolitical crises, where initial price spikes were followed by consolidation as markets stabilized. Looking forward, we think that central bank demand, continued diversification away from the US dollar, and concerns over global debt levels remain strong structural supports. We expect gold prices to trade toward USD 6,200 oz into midyear. Silver should also benefit from higher gold prices and supportive fundamentals.
Diversify with broad commodities
We believe broad commodity exposure continues to offer diversification and growth potential. Commodities offer a valuable hedge against inflation and supply shocks, and their typically low correlation with equities and bonds makes them an effective portfolio diversifier, especially in periods of market stress. The combination of new supply disruptions in the Strait of Hormuz, elevated geopolitical risk, and structural demand trends supports the case for maintaining exposure.
Energy
Severe supply constraints owing to the near closure of the Strait of Hormuz and uncertainty over a possible resolution are keeping energy prices elevated. Strategic reserve releases will only partially offset lost supply, and refined product prices are likely to remain elevated. We have raised our Brent crude forecasts to USD 90/bbl for end-June, and then USD 85/bbl for end-September and end-December 2026, with upside risks if disruptions worsen or persist.
Industrial metals
Industrial metals, especially copper, have benefited from secular demand drivers such as electrification, the energy transition, and the buildout of AI infrastructure. Despite near-term volatility on growth worries linked to the energy price surge, we expect structural deficits in copper to persist, supporting prices over the medium term. We target a level of USD 14,500/mt by year-end. Meanwhile, disruptions to Mideast aluminum production, whether due to the conflict itself or problems with energy access, should continue to tighten supply for this key construction and manufacturing input.
Agriculture and livestock
Recent industry data on cattle continues to show supportive fundamentals, with US beef cow numbers hitting a 75-year low. Elsewhere, tariff uncertainties increase risks of further tightening in US beef inventories. We see opportunities, including in lean hogs, to reengage in the sector as we approach mid-2026. Agricultural commodities and livestock can provide additional diversification benefits, with prices driven by weather, climate trends, and global supply dynamics, and potentially buffering against other cross-asset portfolio risks.
