UBS Warns of Geopolitical Risks in Commodity Market Outlook 2026

💡 UBS expects gold, oil, and base metals to be impacted by escalating geopolitical tensions.

The Federal Reserve's decision to maintain interest rates has significant implications for commodity markets. The central bank's hawkish stance is likely to support the US dollar, making it more expensive for importers to acquire commodities. This could lead to higher prices for oil, gold, and base metals.

Rising Geopolitical Tensions to Impact Commodity Markets

UBS analysts warn that escalating tensions between major economies could disrupt global trade and drive up commodity prices. The ongoing conflict in Ukraine has already led to a surge in oil prices, with Brent crude trading above $100 per barrel. Gold prices have also risen in response to the heightened geopolitical uncertainty.

Impact on Gold Prices

Gold prices have been volatile in recent months, influenced by the US dollar and interest rates. As the Federal Reserve maintains its hawkish stance, gold prices may continue to be pressured. UBS analysts expect gold prices to fall to $1,500 per ounce by the end of 2026. $GLD has been under pressure in recent weeks, falling to $180 per ounce.

Oil Prices Under Pressure

Oil prices have been volatile in recent months, influenced by the ongoing conflict in Ukraine and the OPEC+ production cuts. UBS analysts expect oil prices to remain elevated due to the ongoing conflict and the potential for further OPEC+ production cuts. $USO has been under pressure in recent weeks, falling to $120 per barrel.

Base Metals to be Impacted by Geopolitical Tensions

Base metals such as copper, zinc, and nickel are likely to be impacted by the escalating geopolitical tensions. UBS analysts expect prices for these metals to rise due to increased demand from countries stockpiling commodities in preparation for potential supply disruptions. $DBB has been under pressure in recent weeks, falling to $20 per share.

What It Means for Investors