How Will the Iran Conflict Impact Commodities

While US-Iran negotiations drive near-term volatility, UBS recommends maintaining active commodity allocations as a hedge against inflation and geopolitical shocks. Broad exposure, including gold and industrial metals, offers structural growth potential and portfolio diversification.

Key Takeaways

• 1.Near-term commodity volatility will remain high due to US-Iran negotiations and geopolitical tensions.
• 2.Commodities serve as a hedge against inflation and energy supply shocks despite elevated price swings.
• 3.Fundamentals for gold, copper, and aluminum remain supportive over the medium term due to low inventories and structural demand drivers.

Table of Contents

• Key message
• 01 Volatility in commodities is likely to stay elevated in the near term.
• 02 The geopolitical risk premium should fade, but fundamentals look supportive.
• 03 We continue to favor commodities, with a focus on active management.
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