The commodity logic will change in 2026! UBS: The “emotional game” will subside, and dominance will return to fundamentals

The Zhitong Finance App noticed that during quiet trading at the end of the year, the global commodity market showed a complicated picture: precious metals shone across the market and hit a record high, driven by both interest rate cuts expectations and geopolitical safe-haven needs; while the energy and agricultural products market fluctuated due to fundamental factors and weather risks.

UBS Executive Sales Director Claudio Martucci said that although market liquidity was scarce due to the holidays, which amplified price fluctuations for individual products, the flow of capital clearly points to risk aversion and defense. Overall, the market is preparing for a fresh start in 2026, and the Federal Reserve's policy trends and macro data will be the key to the next trend.

Precious Metals: An “Epic” Carnival Driven by Emotions

Last week, the precious metals market became the absolute focus of the commodities sector. Driven by expectations of the Federal Reserve's interest rate cut in 2026 and geopolitical risk aversion, the price of gold hit a record high. Silver's performance was particularly impressive. Its monthly increase was the highest since 1979, with a weekly increase of 16.08%. Platinum and palladium also hit multi-year highs at the same time.

However, the concerns behind this sharp rise cannot be ignored. UBS pointed out that weak liquidity at the end of the year amplified price fluctuations, and the current rise is largely driven by sentiment and technical momentum rather than solid industry fundamentals. This means that as market sentiment returns to rationality, assets with such high premiums may face the risk of retracement.

Energy and industrial metals: a complex game between policy and supply and demand

Energy market performance is fragmented. Crude oil prices fluctuated around $58 per barrel, supported by US actions against Venezuela and the Russian-Ukrainian conflict, but sufficient global supply limited the increase. Notably, UBS said the US government is inclined to manage inflation through lower oil prices, which has set an “invisible floor” of around $50 for oil prices. The natural gas market, on the other hand, has become “synonymous with fluctuation,” and prices frequently jump short as weather forecasts change.

In terms of industrial metals, prices remained near historic highs due to market optimism about China's economic support policies and strong demand for metals such as copper and aluminum in green energy infrastructure.

Agriculture and Animal Husbandry: Profit Harvesting Under Climate Risk

The agricultural market is being doubly tested by South American weather and geopolitical risks. Although corn and beans were initially boosted by Chinese demand expectations, there was a “Santa Claus market,” but then they were pressured by farmers cashing out and selling. A significant warning point is that soybean exports fell by nearly one-third year over year, which may affect planting decisions in 2026. In contrast, corn exports surged 30% year over year, becoming the highlight of the grain market. In animal husbandry, the fundamentals of the bull market are still steady, but the pork market is facing downward pressure due to increased supply.

Will 2026 usher in an inflection point?

Market liquidity is expected to continue to be sluggish as we enter the New Year holidays, which will further amplify the impact of any breaking news on prices. UBS reminds investors to pay attention to the minutes of the Federal Reserve's December meeting and the US initial jobless claims data released this Tuesday.

Overall, the commodity market is currently in a critical period of high fragmentation. Although precious metals are in the limelight, their high valuations are challenging investors' psychological bottom line; the energy and agriculture markets are looking for new pricing logic in the gap between policy intervention and climate variability. As for the 2026 layout, the return to fundamentals may replace the current emotional game and become the main theme of the market.