Insights
CommoditiesCommodities 2026 outlook: The year that was, the year that could be
Precious metals toiled away for years with bullish fundamentals before investors noticed. A look at how that type of obscurity is a feature – not a bug – of investing in commodities.
Author
Robert Minter
Director of ETF Investment Strategy
Duration: 14 Mins
Date: Dec 16, 2025
Imagine a publicly traded retail company that goes completely unnoticed by most of the analysts despite selling out of all its goods for four years. A similar scenario just played out in several commodities.
Since 2016, Silver demand has grown by 17%, largely driven by a 143% increase in demand from solar panel producers.1 Supply, on the other hand, has fallen by 8.8% over that time.1 In 2019, demand growth and supply decline pushed the silver market into deficit. Yet in the six full years since 2019, only three resulted in price appreciation indicative of a market in deficit.2 Now this year, investors have finally noticed a bit of price momentum, investigated the fundamentals, and allocated.
A similar situation also occurred in the platinum and palladium markets. These are unique features of the commodity market.
The platinum market has been in a supply deficit for seven of the last 11 years, including 2025's projected deficit.3 Yet in the four years prior to 2025, only 2022 had a positive annual price return, and that was due to expectations of a tariff or sanction on Russian platinum following the invasion of Ukraine.4
Palladium is even more dramatic. The palladium market has been in deficit since 2012.5 Yet, palladium prices fell on an annual basis each of the last four years prior to 2025.4
There are six main subsectors of the Bloomberg Commodity Index.6 Only one of those six had negative returns.7 The one subsector with negative returns was agricultural softs.
A drop in sugar (-21.03%) and cotton (-8.03%) proved too much for the strong returns in coffee (+29.16%) to overcome.8 Sugar supply exceeded expectations in India and Thailand, while Brazil shifted the sugar cane harvest to sugar production and away from ethanol as crude oil prices dropped. Coffee rose as the US imposed tariffs on Brazilian exports.
The five subsectors with positive returns are energy, agricultural grains, industrial metals, precious metals, and livestock:
- The energy subsector return was positive despite only two of the six commodities posting positive returns. The heavier weighting to natural gas (+33.5%) more than compensated for the declines in both US-grade crude (-18.4%) and European-grade crude (-15.3%), as well as minor declines in gasoil (-1.4%) and gasoline (-5.3%), although a minor gain in heating oil (+0.5%) helped.8 Overall, a surprise reversal of OPEC's production cuts led the market to fear oversupply, while 2025 was bookended by cooler-than-normal winter weather, which drove higher natural gas and heating oil prices.
- The agricultural grains subsector return grew with the help of soybeans (+13.9%), soybean meal (+2.2%), and soybean oil (+30.1%), while corn (-5.0%), wheat (-3.7%), and winter wheat (-7.4%) declined.8 US trade volumes fell as China halted corn, wheat, and soybean purchases early in 2025. Prices rose in October after trade talks between the US and China showed progress.
- Industrial metals subsector return was strengthened by copper (+28.8%), aluminum (+12.5%), zinc (+7.0%), and lead (+0.8%), while nickel (-3.1%) weakened.8 Much of the rally was led by disappointing supply levels, delayed projects, and failed merger attempts amongst producers.
- Precious metals subsector return shined via silver (+93.0%) and gold (+59.7%).8 Sustained silver deficits finally translated into sizable returns. Gold also attracted sizable investor attention for the first time since the rally in central bank demand began four years ago.
- The livestock sector was driven by cattle (+11.2%) and held back by hogs (-0.9%).8 The US cattle herd is the smallest in 70 years after multi-year droughts that have destroyed grasslands.9
A look ahead
A number of events could turn out to shape 2026. A kinder (more dovish) Federal Reserve could finally get federal funds rates to roughly the same level as the 2-year US Treasury yield, where it historically resides.10 That is a win for people who borrow. It would be more meaningful if we focused on the spread between credit card rates, which average 21.39%, and the prime lending rate at 6.75%, as the spread between those two rates has risen from 5.14% in 2007 to 14.64% today, respectfully.11
Tariffs are going to evolve, the Supreme Court will have its say, and the administration can reimplement with other means. Regardless, it isn't a great look going into midterms, where affordability is likely a major issue. While deal making is going to remain on the front burner, terms of trade.
The antidote for the spread of democratic socialism in the US isn't loud boisterous debates but rather by converting the crowd that does not own investment assets into the 50% of the country that does own a company stock share or two and is invested in capitalism. The four million babies who receive $1,000 Trump accounts on their birth are unlikely candidates for socialism.
Finally, a stronger USMCA trade agreement with Mexico and Canada serves as a foundation for implementing a more regional focus and it seems clear we are seeing a return of the Monroe Doctrine, which prioritizes South America as a trading partner.
A look at commodity sectors
Precious metals
Silver looks set to finish its seventh consecutive year in supply deficit even as demand for electronics increases, and China readies its solar panel manufacturing powerhouse to electrify emerging and frontier markets. If the bull falters, it will likely be due to fickle investor demand, which has been a sizable portion of the rally. ETF owners now collectively hold approximately a year's supply of silver at 830 million ounces, up from 679 million ounces, the five-year low in 2024.12
Gold has risen 60% this year with the help of central banks, who, through October, continue to purchase just 10% off the record pace of the last three years. Each of those years saw central banks buy the equivalent of nearly ⅓ of the global gold mine supply.13 Gold has also seen a belated uptick in investor purchases this year.12 Central banks are buying to diversify the risk of holding US dollars in their foreign exchange (FX) reserves, and also in case the alarming increase in developed country sovereign debt causes a currency revaluation at some point, as occurred at the end of World War II which led to the Bretton Woods agreement.
The visceral reaction to the loss of purchasing power among the US electorate is generating demand not just for gold but also for silver, platinum, and palladium, as a perceived way to defend the purchasing power of the money earned.
In the year ahead, we see a potential for the gold rally to be well supported. The US holds 81% of its FX reserves in gold.14 But globally, gold accounts for 25% of FX reserves; China's gold is just 8% of its FX reserves, on its way to 10% and still far from the global average of 25%.14
For platinum to continue its advance, we need to see continued growth in China's jewelry demand. During London Platinum Week, compelling evidence emerged that the Chinese consumer had begun to revert to platinum jewelry from gold. Given capital restrictions, jewelry in China is also an investment – and not just jewelry.
Palladium has the potential to continue higher based on a rollback of the electric vehicle (EV) transition in the US. Fully 80% of palladium demand comes from the automotive sector for pollution control (auto catalysts).5 By our calculations, 77% of the US public would pay more for an equivalent driving range by fueling up at a public EV charger in their state than by buying gasoline in their state.15 The EV tax credit ended in September, when the average selling price of an EV was $9,000 higher than that of a gasoline vehicle, during the last month of the $7,500 tax credit and after an $8,000 dealer incentive.16 The current administration has proposed a revision to Biden-era miles per gallon (mpg) standards for 2031 from a 50 mpg standard that would have required EV production to 34.5 mpg.17 This is important to put in context, as during 2020–2021, the rollout of EV models and government support were contributing factors in the palladium bear market on the assumption gasoline vehicles would no longer be sold. To state the obvious, the flip-flop of policy every four years makes it nearly impossible to make progress on issues that require decades of investment and consistent standards to solve.
Oil
2025 was a year of surprises from the Organization of the Petroleum Exporting Countries (OPEC) as the rapid unwind of voluntary production cuts pushed additional barrels back onto the market.18 Ideally, these barrels would pressure Kazakhstan to cut its overproduction. This supply has been difficult to constrain below quota after a 10-year investment by Chevron, ExxonMobil, and Shell into the Tengiz and Kashagan oil fields raised production. Additionally, the potential for a Russia-Ukraine peace deal threatens to allow more Russian petroleum onto the market.
We enter 2026 with two oil market indicators at levels we have not seen since the shale revolution began in 2014:
- The first is sentiment, as judged not by survey but by actual futures contracts on an exchange. The current number of net long WTI futures contracts is at the lowest level since before 2014.19 Stated another way, money managers have never had their portfolios less prepared for an uptick in oil prices.
- The second is that US commercial petroleum inventories (crude, gasoline, and diesel) are very near their lowest levels since 2014.20 Both sentiment and commercial inventories are at levels that are potentially quite bullish for oil prices.
The US strategic petroleum reserve is a government inventory in case of large supply disruptions, and there too, inventories are lower than in the past. The strategic petroleum reserve inventory was 635 million barrels at the end of 2020 and is now 412 million – down by over 200 million barrels – or roughly ⅓.21 Both the current and prior presidents have been adding back to these inventories since they bottomed at 347 million in 2023.
There are a few economic indicators that track so closely with presidential approval ratings as retail gasoline prices, so a rising oil price in 2026 poses risks to the incumbent party in midterm elections. It has also provided motivation to implement policies that could lower gasoline prices in an election year. However, there may be room for some gains without policy reaction, as the retail gasoline price ($2.90) is now the lowest in 4.5 years.22
Grains could see lower input prices if a Ukraine peace deal allows Russia and Ukraine to increase fertilizer supply and lower costs. Typically, lower input costs lead to cheaper agricultural grain prices. However, if we are to see rising agriculture prices it will require two things: US agricultural exports must continue unhindered, and a shift from El Niño to La Niña, which will make drought conditions in North and South America more probable along with higher prices.
Industrial metals
Industrial metals demand is driven by themes with a long implementation: artificial intelligence (AI) data centers, electrical grid upgrades, renewable energy, especially in China and Europe, and EV sales. The number of very large projects is also meaningful to industrial metal demand. US shipbuilding may spend $40 billion per year; some portion of the $5.1 trillion pledged to be spent in the US by our trade partners may be spent; Ukraine and Gaza need to be rebuilt; and European defense spending may occur.
Supply is constrained by mining project delays, permit issues, government disputes, mine mergers that fail to proceed, and the dearth of new resource-rich mines.
Copper and aluminum are substitutes, and when copper prices are more than four times those of aluminum, substitution can make economic sense.
Aluminum, one of the only commodities where recycling is profitable, is very energy-intensive to produce. China has put an energy cap on aluminum smelting, so the demand for copper may pull the price of both copper and aluminum higher.
Final thoughts
While risks remain, notably from a potential AI debt bubble or rising Japanese sovereign bond yields, we believe there are several tailwinds for commodities. Lower interest rates can drive cyclical expansion and a rise in demand. Smaller, more geopolitically inspired supply lines are also more vulnerable to disruption and prices could be more volatile than in the past. Investors are underweight oil to a magnitude that is rare, even a mild adjustment toward more normal levels would be bullish for oil. US electricity demand is rising for the first time in 20 years, although at a small growth rate, the size of the supply needed implies many large new generation sources. Renewable energy growth is occurring at different rates in different regions but globally it is still rising and is very metal and energy intense.
Endnotes
1 "Silver Supply and Demand." World's Silver Survey 2025. The Silver Institute, December 2025. https://silverinstitute.org/silver-supply-demand/. 2 Bloomberg data, Silver annual returns, 2019–2024. 3 "Platinum Quarterly." World Platinum Investment Council, December 2025. https://platinuminvestment.com/supply-and-demand/platinum-quarterly. 4 Bloomberg data, Platinum annual returns, 2021–2024. 5 "PGM market report." Johnson Matthey, May 2025. https://matthey.com/documents/161599/509428/PGM_Market_Report_25.pdf. 6 The Bloomberg Commodity Index is a broadly diversified commodity index consisting of 25 commodities weighted by global production value adjusted for liquidity and for monetary assets. 7 Bloomberg, 12/31/2024-11/30/2025. Note: For this review, all year-to-date returns are through November 30, 2025. 8 Returns via FactSet Research Systems, Inc., 12/31/2024–11/30/2025. 9 "America's smallest cattle herd in 70 years means rebuilding will take years and beef prices could stay high." Fox News, November 2025. https://www.foxnews.com/politics/americas-smallest-cattle-herd-70-years-means-rebuilding-take-years-beef-prices-could-stay-high. 10 Bloomberg data, US FOMC federal funds rates; 2-year US Treasury yield, 12/31/1999–11/30/2025. 11 Bloomberg data, US prime lending rate; US commercial credit card lending average rate, 7/12/2000–12/11/2025. 12 Bloomberg data, ETF holdings of silver in ounces, 03/24/2018–11/28/2025. 13 "Demand and supply." Data. World Gold Council, December 2025. https://www.gold.org/goldhub/data#demand-and-supply. 14 "Central Bank Gold Statistics: Central banks ramp up gold buying in October." World Gold Council, December 2025. https://www.gold.org/goldhub/gold-focus/2025/12/central-bank-gold-statistics-central-banks-ramp-gold-buying-october. 15 Aberdeen Investments, based on US public EV charger rates by state, November 2025; GasBuddy average gasoline price by state, US population data by state, December 2025. 16 "EV Market Monitor – September 2025." Expert Perspectives. Cox Automotive, October 2025. https://www.coxautoinc.com/insights-hub/ev-market-monitor-september-2025/. 17 "President Trump & Transportation Secretary Sean P. Duffy Unveil New “Freedom Means Affordable Cars” Initiative to Reset Fuel Economy Standards." Newsroom. U.S. Department of Transportation, December 2025. https://www.transportation.gov/briefing-room/president-trump-transportation-secretary-sean-p-duffy-unveil-new-freedom-means. 18 "OPEC+ agrees to fully unwind voluntary crude output cuts in Sept." S&P Global, August 2025. https://www.spglobal.com/energy/en/news-research/latest-news/crude-oil/080325-opec-agrees-to-fully-unwind-voluntary-crude-output-cuts-in-sept. 19 Bloomberg data, WTI net long contracts, 12/31/2013–11/18/2025. 20 Bloomberg data, commercial crude, diesel, gasoline inventory combined, 1/1/2013–12/5/2025 (lowest 11/7/2025). 21 Bloomberg data, US strategic petroleum reserve inventory, 9/6/2008–12/5/2025. 22 "18 Month Average Retail Price Chart." Gas Price Charts. GasBuddy, December 2025. https://www.gasbuddy.com/charts.
Important information
The statements and opinions expressed are those of the author and are as of the date of this report. All information is historical and not indicative of future results and subject to change. Reader should not assume that an investment in any securities and/or precious metals mentioned was or would be profitable in the future. This information is not a recommendation to buy or sell. Past performance is not a guide to future results.
The abrdn Silver ETF Trust, abrdn Gold ETF Trust, abrdn Platinum ETF Trust, abrdn Palladium ETF Trust and abrdn Precious Metals Basket ETF Trust are not investment companies registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trusts are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility.
Commodities generally are volatile and are not suitable for all investors. Please refer to the prospectus for complete information regarding all risks associated with the Trusts.
The value of the Shares relates directly to the value of the precious metal held by the Trust and fluctuations in the price could materially adversely affect investment in the Shares. Several factors may affect the price of precious metals, including: A change in economic conditions, such as a recession, can adversely affect the price of the precious metal held by the Trust. Some metals are used in a wide range of industrial applications, and an economic downturn could have a negative impact on its demand and, consequently, its price and the price of the Shares; Investors’ expectations with respect to the rate of inflation; currency exchange rates; interest rates; Investment and trading activities of hedge funds and commodity funds; and global or regional political, economic or financial events and situations. Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares. Should there be an increase in the level of hedge activity of the precious metal held by the Trust or producing companies, it could cause a decline in world precious metal prices, adversely affecting the price of the shares.
Also, should the speculative community take a negative view towards the precious metal held by the Trusts, it could cause a decline in prices, negatively impacting the price of the shares. There is a risk that part or all of the Trusts’ physical precious metal could be lost, damaged or stolen. Failure by the custodian or sub-Custodian to exercise due care in the safekeeping of the precious metal held by the Trusts could result in a loss to the Trusts.
The Trusts will not insure its precious metals and shareholders cannot be assured that the custodian will maintain adequate insurance or any insurance with respect to the precious metals held by the custodian on behalf of the Trust. Consequently, a loss may be suffered with respect to the precious metal that is not covered by insurance. Commodities generally are volatile and are not suitable for all investors.
Diversification does not eliminate the risk of experiencing investment losses.
Investors buy and sell shares on a secondary market (i.e., not directly from Trusts). Only market makers or “authorized participants” may trade directly with the Trusts, typically in blocks of 50k to 100k shares.
This material must be accompanied or preceded by the prospectus. Carefully consider each Trust’s investment objectives, risk factors, and fees and expenses before investing. To view the prospectus, please click here – abrdn Silver ETF Trust, abrdn Gold ETF Trust, abrdn Platinum ETF Trust, abrdn Palladium ETF Trust, and abrdn Precious Metals Basket ETF Trust.
ALPS Distributors, Inc. is the marketing agent.
ALPS is not affiliated with abrdn.
ETF002416 3/15/26
AA-151225-202129-1
