What trade tensions could mean for commodities

By: Bart Melek

Jan. 17, 2025 - 1 minutes 17 seconds

Concerns about an escalation in trade tensions have been fuelling market volatility, including in the commodities space.

Key Takeaways

Gold

  • We have seen large inflows of gold into the U.S market resulting in large spreads between London and U.S. pricing.
  • Investors and Central Banks are concerned over inflation and the impact of restrictive migration policy over cheap labour supply and so have used gold as a hedge, propelling prices to record levels.
  • Central banks have seen record buying of gold in recent years owing to concerns about the sustainability of USD purchase power, and geopolitical tension between China and the U.S.

Oil

  • If tariffs are around for a long time, oil prices are likely to be higher, although this could be offset as Opec might release supply and with production increases and weaker demand, particularly in China.
  • Tariffs mean higher US domestic prices than would be otherwise, however demand for energy is inelastic and does not change even if prices go up or down.
  • U.S refiners rely on Canadian heavy crude oil, which is easily accessible via pipelines. Other products could be sourced from the Middle East, but questions remain over onboarding via shipping or rail.

Watch the full episode featuring Bart Melek discussing the outlook for gold and oil on MoneyTalk Live

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Portrait of Bart Melek

Global Head of Commodity Markets Strategy, TD Securities

Portrait of Bart Melek

Bart Melek
Global Head of Commodity Markets Strategy, TD Securities

Portrait of Bart Melek

Bart Melek
Global Head of Commodity Markets Strategy, TD Securities

Bart provides commentary on commodity and various other financial markets and how they relate to the sectoral and macroeconomic outlook. Bart is a sought after media source for many leading print publications and business television programs. His forecasts are also part of the global consensus. Bart joined TD Securities in 2011 and has over 20 years of experience analyzing global precious metals, base metals, energy, and financial markets, as well as North American and global economies.

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