The year 2024 was marked by significant volatility in commodity markets, owing to heightened geopolitical tensions in West Asia, a continued war between Russia and Ukraine, and key elections in major economies like the United States, India, and the European Union.
Central bank rate cuts and an increase in safe-haven buying provided support to gold and silver, while US President Donald Trump’s pro-America policies exerted pressure on other metals.
Gold is on track for its best performance since 2010, reaching a record high of $2,790 per ounce earlier this year. Crude oil prices also experienced sharp fluctuations due to geopolitical unrest and sluggish demand from China.
These dynamics are expected to continue shaping commodity prices into the new year. To gain insights into the 2025 outlook, CNBC-TV18 spoke with industry experts Ajay Kedia, Director of Kedia Commodities; Dinesh Somani, Founder of Pro Intellitrade Services; and Amit Goel, Co-Founder of PACE 360.
Below are the edited excerpts:
Q: How would you look at overall base metals as a space? What are the fundamentals that you will watch out for in 2025? And what is a top trade that you would want to give in this sector?
Kedia: 2024 has been very good for commodities, with almost double-digit returns across the board. Despite uncertainties surrounding the Chinese economy due to Western sanctions and other factors, we’ve seen zinc prices gain nearly 20%, aluminum around 19%, and lead was slightly oversupplied, which is why prices have been slightly negative. Copper, which was expected to test around ₹11,000-11,500, didn’t see the expected consumption uptick in 2024. However, I believe 2025 is going to be a fantastic year. On one hand, geopolitical tensions from Russia, Ukraine, and the Middle East could impact the consumption cycle. On the other, with Donald Trump returning to the political spotlight, the number of alerts and tweets post-January 20th could significantly influence the global scenario. Despite these uncertainties, central banks globally have started cutting rates, which supports a bullish outlook on metals like copper, zinc, and aluminum.
While surpluses are expected in the second half of 2025, particularly for aluminum and zinc, the first half is likely to be strong for metals. My top preference remains zinc, which has consistently performed well. Year-to-date, we’ve seen a return of 20%, and we expect a good buying opportunity around ₹270-272. On the upside, zinc could potentially reach ₹340. Aluminum may retest the ₹300 level, while copper, though more conservative, could reach ₹1,100, especially as demand for clean energy and electric vehicles (EVs) remains strong, supported by rate cuts from major central banks.
Q: Where do you see metals performing in 2025 and would you also want to divide the year into two? And even as the international markets have seen gains, the Indian prices have gained slightly more because of the rupee depreciation. Is that a phenomenon that you see continuing in all of 2025?
Somani: We saw copper start the year at ₹730 levels on MCX and then climb to ₹965, a gain of almost 30%. However, the dollar index surged from 100 to 107-108, an 8% increase, and base metal prices collapsed from their all-time highs. Copper, for instance, fell from ₹965 to ₹765 and has since been consolidating in the ₹765-₹865 range. I don’t expect much movement in copper during the first three months of the new year. My expectation is for copper to trade within the ₹765-₹865 range over the next quarter, though I believe prices could gradually move higher over time.
The best-performing base metal emerging from this environment is zinc. I expect zinc prices to bottom out around ₹265-270 levels, with a potential upside to ₹330. We saw zinc prices rise from ₹230 to ₹300 last year, a gain of almost 30%, and I expect this positive momentum to continue into 2025. Of course, the USD-INR exchange rate has added a premium to the prices, but zinc still appears to be the strongest base metal among them all.
Q: All-time highs for gold and then a correction. But from now for 2025, what is it that you’re watching and where do you see gold prices going to?
Goel: There are quite a few factors I want to discuss regarding gold. First, there’s the dollar index, which is undoubtedly one of the most important factors influencing gold’s price. As we know, the dollar index has been skyrocketing ever since the odds of Trump winning the election started increasing in October. From around 100 in September, it has now surged to 108.2. The dollar index has risen significantly, but gold has weathered this storm quite well, I would say.
Next, there are US bond yields, which have also been on a sharp rise for the past three months. Whether it’s the two-year, 10-year, or 30-year US bond yields, all of them have climbed considerably and are now near one- or two-year highs. This is the second-factor influencing gold.
The third factor is the USD-JPY relationship. We know that JPY and gold are similar in that both have zero to negative yields, while currencies like the dollar, euro, and Canadian dollar offer positive yields. However, gold and the yen currently do not provide any yield—at least, not yet. There’s a possibility the Japanese central bank may raise rates slightly in the coming months, but as of now, JPY and gold are correlated. The yen has performed poorly this year and is now near its three-decade low, making it another relevant factor for gold.
When you combine all these macro factors—along with the fact that US economic data was extremely strong from October to early December, but has started to weaken slightly in the last couple of weeks—the picture for gold looks interesting. Essentially, the macro environment for gold was at its worst in recent months when the dollar index was rising, US bond yields were climbing, the yen was weakening, and US economic data was exceptionally strong. Despite all this, gold has managed to hold up well.
Looking ahead, the macro outlook for gold seems somewhat better. We believe the dollar index will likely decline in the first quarter of 2025. US bond yields are close to their peak, the yen is nearing its bottom, and US economic data has already started to soften in the past week or two. This creates a much more favorable macro backdrop for gold.
Between October and November, we saw a sharp correction in gold, with the price dropping from its all-time high of $2,790 in October to around $2,535 in the second week of November. I sense that this level correction is mostly over, having occurred in a short timeframe of just two to three weeks. So, the price correction seems to be behind us. The macro backdrop is improving, but I still believe that time correction is needed for gold. As you rightly pointed out, 2024 has been one of the best years for gold in many years. Moreover, from October 2023 to October 2024, gold rose by more than 50%. There have been a lot of excesses in gold over the last four to five months, some of which have been washed out. However, more of these excesses need to be worked off in the coming months.
In conclusion, I think the level correction is mostly over, and the time correction will likely play out over the next two to three months. Global macro conditions for 2025 are looking much better than what we’ve seen in the last few months. If this time correction is also completed in the next two to three months, I believe the stage will be set for gold to rally substantially in the second half of 2025.
Q: When you say substantial, what are you saying in terms of levels?
Goel: I sense that it will be difficult for gold to break $3,200, which is the higher end of the target put up by most of these Wall Street banks. I think it will be tough for gold to cross that level in the calendar year 2025. But more importantly, I believe that investors should start buying gold on every dip now.
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