Key commodity sectors will bottom in the coming months, says UBS By Investing.com

Investing.com — UBS strategists predict that major commodities sectors will peak in the coming months as current market challenges begin to ease.

Despite the weak performance in most commodity categories – with the exception of precious metals – the outlook remains positive, with sector-wide recovery and growth expected in 2025.

“Over 6-12 months, we forecast total returns of at least 10% for UBS CMCI,” the analysts said.

The energy sector, in particular, came under pressure from a combination of macroeconomic concerns in the US and Europe, as well as reduced refining activity and lower crude imports from China.

This prompted speculators to push oil prices to multi-month lows. However, UBS believes the market has become too complacent and predicts a rebound in oil prices.

Key drivers of the expected recovery include increased compliance among OPEC+ members and a steady decline in global oil inventories. UBS expects oil prices to exceed $80 a barrel as global interest rate cuts help mitigate recessionary risks.

The industrial metals sector was similarly hit by disappointing data from China, particularly in its property and credit markets.

However, UBS remains bullish on the sector, pointing to the ongoing energy transition as a significant catalyst for growth.

The transition to a net-zero global economy will require around $100 trillion by 2050, with industrial metals such as , lithium and aluminum playing a fundamental role in electrification and renewable energy projects.

UBS analysts anticipate double-digit returns for industrial metals over the next 12 months, driven by increased demand for these materials to support decarbonisation efforts.

Gold remained resilient in 2024, and UBS expects further price gains as central banks continue to build reserves and Fed rate cuts spur demand from ETF investors.

The brokerage maintains its forecast that the price of gold will reach $2,700 per ounce by mid-2025.

Silver, which often moves in tandem with gold, is also expected to benefit from improved industrial production. UBS believes that silver has strong recovery potential in the coming months.

UBS remains cautiously bullish on agricultural commodities, citing weather-related risks in Latin America and favorable supply-demand dynamics.

Despite the mixed performance, some soft commodities, such as sugar and , are expected to post low-double-digit percentage price increases over the next six months. UBS has a moderate overweight recommendation on this sector.