How Will the Iran Conflict Impact Commodities

Near-term commodity prices are driven by US-Iran tensions, but UBS maintains a positive medium-term view based on supportive fundamentals and diversification benefits.

Key Takeaways

• 1.Negotiations between the US and Iran are the primary near-term driver for commodity markets.
• 2.Commodities serve as an effective portfolio diversifier and hedge against inflation and energy shocks.
• 3.Medium-term fundamentals remain supportive for gold, copper, and aluminum due to structural drivers like electrification.

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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