Commodities Market Outlook: 4Q ‘25

In a new presentation from Citi Research, a team of strategists led by Head of Commodities Research Max Layton offers fourth-quarter and 2026 outlooks for more than 25 commodity markets, along with updated analysis of the global macro backdrop. 

Among our key takeaways, we see the ongoing bull market in gold and silver and the moderate bear market in crude oil continuing into early next year. We see the gold and silver bull market broadening and eventually shifting into copper and aluminum in 2026, driven by the prospect of new dovish Federal Reserve leadership, and related lower U.S. real interest rates and downward pressure on the dollar. We also see stimulus from the One Big Beautiful Bill Act reaching households and building capex-investment momentum during 2026’s first half, driving improvement in U.S. and global growth and sentiment.

We see both the cyclical and structural drivers of the gold bull market staying intact in the near term, with the next 0-3-month forecast around $3,800. (Since the report’s publication we have raised our 0-3-month gold price forecast to $4,000.) Spending on gold has risen to levels even higher than what we saw during 1980’s oil shock, the highest level in more than 50 years. The value of the stock of gold above ground owned by households has risen to more than 3% of household net wealth, doubling over the past five years to an all-time high.

We continue to see Brent crude oil prices falling to $60 a barrel by year’s end, and forecast an average of $62 a barrel for the second through fourth quarters of 2026. China’s continued stockpiling and a lower share of visible inventories surfacing across OECD hubs should result in a shallow downturn in oil prices, despite large headline surpluses driven by OPEC+ returning oil capacity to the market. The major downside risk we see is de-escalation in the Russia-Ukraine conflict; the major upside risk is European and U.S. tariffs/sanctions on India and China. Neither is our base case, however. Our bear case (30% probability) is for Brent crude prices to move more quickly below $60 a barrel and toward $50; our bull case (10% probability) is for a price jump above $75 a barrel.

In fuel oil, the return of Nigeria’s Dangote residual fluid catalytic cracker (RFCC) in early 2026 is likely to drive a widening of the North-West Europe Hi-5 spread, the differential between Fuel Oil 0.5% Sulfur and Fuel Oil 3.5% FOB Rotterdam.

We see major near-term U.S. arbitrage and flat price upside opportunities for COMEX palladium, as we think markets are underpricing potential tariff risk if Critical Mineral Section 232 tariffs are imposed, with a report on the matter expected to reach President Trump by October 19. Fifty-five other metals and minerals are potentially in scope; our base case is for a variety of targeted measures, including immediate or phased tariffs of up to 50%.

We are bullish on LME aluminum, taking a 6-36-month view and seeing any dips as strong long-term buying opportunities, especially given the prospect of a cyclical recovery trade in the first half of 2026 on the back of a dovish Fed and President Trump pushing for growth ahead of the U.S. midterm elections. Aluminum is highly leveraged to an uptick in global growth in sentiment; we see upside of 30% and 50% in prices in our base and bull cases by 2027. Aluminum is heavily exposed to AI/data centers, humanoid and other robots and decarbonization-related demand, and it has very limited supply growth.

We are constructive in the medium term on copper, with a $12,000-a-ton base case (~20% upside) over the next six to 12 months; our bull case is +40% to $14,000 a ton. While we’re neutral for this year’s fourth quarter, copper is exposed to structural energy-transition and AI trends and leveraged to a pickup in U.S. and global growth expectations.

We’re increasingly bullish on uranium and forecast $100 per pound (+33% vs. current spot) toward the end of 2026. The bullish risk skew for uranium prices is significant when combined with potential under-delivery of uranium producers and increasing energy demand that incentivizes an increase in nuclear-energy capacity. We see mine output over the next two to three years as one of the most significant factors determining uranium prices and project uranium supply from existing mines to increase by 16.5 million pounds year over year in 2025, mainly led by increased production in Africa, the U.S. and Kazakhstan. 

We expect Arabica coffee prices to settle below $3 a pound (down ~25% vs. current spot) in the next 12 months, as uncertainty around U.S. tariffs subsides and new trade routes are reconfigured. Fundamentally, there are no weather- or virus-related shocks that would impact near-term coffee supply, and coffee production in Brazil and Central America should be at a record level.

We expect prices of EU allowances for emissions, or EUAs, to hit €95 a ton by year-end 2025 (+20% vs. current spot) as EU Emissions Trading System (ETS) balances tighten and the price action is supported by speculative flows. Large deficits support a bullish outlook near-term, particularly if this winter again sees a lack of wind and solar power generation in Europe.