Global Commodities: Metals headed for even greater heights

Hello, and welcome to this commodity-set episode of AT&E Rate. I'm Otar Tgibwadze, global natural gas analyst at JP Morgan. Today I'm joined by Greg Scheeder, who heads base and precious metals research to discuss his 2026 outlooks across the metals markets. Greg, welcome and thank you for joining. Let's start with gold, which has gained a lot of attention this year after a remarkable gain with prices up almost 55% year to date. Greg, where do you see gold prices heading into next year, and what about the rest of the precious metals complex? Thanks, Otar. As we look further out to 2026, we still retain our structural multi-year bullish outlook on gold, and we are calling at the moment for prices to move again higher next year towards around $5,000 per ounce. It has been quite an exceptional few months in gold. And just to put into context this recent run-up in price and what the demand levels we saw, in the third quarter of 25, across investors, so that's ETFs, futures, and bars and coins, as well as central banks, we saw gold demand totaling almost roughly around 980 tons, and to give a sense that's over 50% higher than the average that we've seen over the previous four quarters, obviously given the price increase that we saw last quarter, that surge demand is even starker when we think about a value perspective. And this 980 tons translates approximately to about 110 billion of quarterly demand inflow. That's about 90% higher than the average of the previous four quarters. So the real question, as we go to 2026, is will this level of a robust and exceptional demand really continue? We ultimately do think 3Q25 was a bit of an outlier in terms of its strength, but as we look to 26, we're still expecting something around 585 tons of average demand a quarter across investors and central banks. I think it really starts with central banks. We expect this boosted central bank buying to continue, and that remains foundational to our bullish gold view. We're expecting something around 755 tons of central bank purchases in 2026. I'll be at a step lower from the last three years where we saw greater than 1,000 funds. It's still elevated versus pre-2022 averages, which were closer to around 400 to 500 tons. And this sort of decline in central bank purchasing, in our views, more mechanical rather than a structural change in central bank behavior. Our prices around $4,000 and above, we just think central banks simply don't need to purchase as many tons of gold to move their gold share to a desired percentage. I'd say on top of this, what also keeps and contributes to that demand forecast is we're expecting investor demand also as further to grow. As of the third quarter of 25, we think investors hold about 2.8% of their total AUM across equity fixed income and alternative investments in gold, but we still think that has further to run in terms of 2026. And we are expecting, after this year, which saw ETF inflows of about 700 tons up about 22% on the year, expecting another 250 tons of inflows in 2026, mainly front half loaded as we do expect two additional Fed cuts over the cycle. Across the other precious metals, silver, platinum, palladium, all still are in a bit of a period of tariff uncertainty, given they're all on the critical minerals list, which is we're still waiting for the investigation to be released from section 232. When we look at silver, despite a weakening industrial demand backdrop at these higher prices, we still see silver prices following gold higher, remain bullish and expect prices to reach $58 per ounce average by the fourth quarter of 26. Across the other ones, platinum is in an interesting dynamic. Platinum prices are now high enough to begin to incentivize, supply, rebalancing, but we still think this ultimately is going to take some time. And in the interim, we're still facing a deficit platinum market. And so ultimately, we expect prices to average around $1,670 per ounce in 2026. Following on palladium, we would say that the upside tariff risk is most acute in palladium. It's not only on the section 232, critical minerals list. It's also, there's a concurrent Russian anti-dumping investigation. But as we look forward and eventually get tariff clarity, I'd say in the near term, that leads to potential upside risk. But as we go forward, we get that tariff clarity, we do think this support for palladium will ultimately fade because we see a totally different fundamental setup with the market moving back towards balance by 2027. Thank you, Greg. So, going back to gold, we see another year of robust demand and price gains for gold as I understood. But given its meteoric rise over the last couple of years, what may slow this down? What do you think are the biggest risks to a continued gold rally? Yeah, sure. So, I'd say, in the near term, we need to understand that ETS will display a decent degree of rate sensitivity. Yes, year to date, they have been outperforming what we would expect based on the moves in U.S. rates, but underlying that kind of investment or investment thesis is a rates story. And so something around a material, materially hawkish pivot by the Fed, maybe precipitated by sticky inflation and much stronger than expected economic resilience. That remains the risk. We don't think that necessarily that's something that's going to come right away, but particularly as we get deeper into 26 and into 27, it's something to keep an eye on. From a more defined demand perspective to things to watch, I was just saying central banks remain foundational to this rally, and we think there's more to go here. But a sharper than expected drop in purchasing from this sector that always remains a risk. And that would reboot that pillar of support. Similarly, a shift towards monetization of gold reserves by some of your outsized EM gold holders is something to kind of put on the card as a potential bearish risk as we look to 2026. And finally, a segment of the market that we don't often talk that much about is jewelry. jewelry makes up 40 to 50% of demand on any sort of given year, but we have been seeing pretty immense pressure in jewelry. So in the tonnage terms, jewelry demand was down by around 19% in the third quarter of 25. Now, at the moment, that's not any weaker than we would have expected given the price rally. And we are seeing a shift into bars and coins kind of picking up some of that slack, but particularly in China, but it is something to keep an eye on. Overall this year, aggregate gold demand has continued to grow amid still elevated central bank purchasing. And this must much more active and stronger investor demand. But if we were to continue to see further price rises, there remains a risk that we could encounter something like a sudden more nonlinear break weaker in jewelry demand that would be a more significant drag on gold prices. Thank you, Greg. I think that's very clear. Maybe a world switching gears to base metals here, which metals stand out as we look to 2026. And how do you see the base metal sector performing over next year? Thanks. Oh, Tar. Yeah, it all starts with copper in our view. That's where we remain most convicted on our bullish forecast. We're expecting prices to rise over the first half of 2026 to around $12,500 per tonning copper. And it really comes down to do things, acute supply disruptions that are set to tighten the refined copper market higher. But importantly, also begin to stress fragile ex-US inventory cover. Ultimately, we see something around a 300,000 metric ton deficit copper, as basically we're seeing and have stripped from our balances over around 500,000 metric tons of new supply given a slate of supply disruptions most meaningfully, the forced measure and tragic mud slide at grassberg last quarter. Ultimately, it comes down to is demand going to be there to stress these balances, because what we have is a set up in copper, where globally, there is enough inventory to cover these supply disruptions. The issue is the majority of it sits in the U.S. after the U.S. significantly front-loaded imports ahead of section 232, Terrace, earlier this year. That has really drained the rest of the world of copper, particularly on the LME and particularly in Asia where we see the market getting most tight. This can either be solved two ways. Under Chinese demand and pull on this market isn't there to really significantly rest things and the market sort of skates by, or we get into an environment where LME prices need to essentially incentivize the closure of this open Komex arbitrage in the U.S. and incentivize the flow of copper out of the U.S. and onto the LME and to other regions where it's needed more immediately. When we think about it, we think China's ability to fully wait out higher prices in the coming months is limited. And ultimately we think Chinese buying will begin to pull on this market, and that's when we quickly transition to a much more significantly bullish backdrop for both LME copper prices and spreads. I'd say across the other sectors in base metals, we are still quite bullish aluminum into the first half of 26. We do think, in the near term, you have a largely balanced market and downside risks to supply. And the magnetism of higher copper prices begins to push alley towards around $3,000 per metric ton in the first half of 26. When we go further out, it's important to note that Indonesia's aluminum supply pipeline is quite immense. And capacity growth, as we look to 26, is really reaching a tipping point and will begin to ramp up and this emergent supply growth is likely to eventually undercut higher aluminum prices. So we don't think that's really a story until later in 2026 and 27. The other notable thing I'd flag across base metals is zinc. Zinc is our preferred relative value short across the sector. We're thinking loser Chinese balances this year are expected to go global in 2026. We have ample concentrated availability and all of a sudden we do believe there's going to be higher vaccines which will incentivize greater smelter utilization globally. At the same time, global demand growth is quite stagnant. It's only a 1% growth year over year as we look to 26 in our forecast. So this drives a growing over supply and zinc which we ultimately think will unwind extra in a tightness and pressure prices down towards $2,650 per metric ton by the fourth quarter of 26. So to summarize, we retain a structural multi-year bullish outlook for gold. Zinc price is heading to $5,000 mark by fourth quarter, fourth quarter, 2026 which also lend support to silver and platinum. In base metals, we are most convicted on our bullish view on copper, Zinc price is rising towards $12,500 per metric ton over first half of 2026. As acute supply disruptions are said to tighten refined copper market and stress fragile ex-US inventory cover. Thank you Greg and thank you all for listening to another commodities edition of JP Morgan's at any rate podcast. We look forward to continue the conversation next week. This communication is provided for information purposes only. Please refer to JP Morgan research reports related to its content for more information including important disclosures. Copyright 2025, JP Morgan Chase & Company, all rights reserved. This episode was recorded on November 21st, 2025.