Oil, gas, and agricultural commodities are rocketing higher. The S&P GSCI index of raw materials has surged 29% since January. But here’s the weird part: metals like copper and nickel have gone nowhere.
The split makes sense when you look under the hood. Energy accounts for more than half of the commodity index, and the Iran war has sent oil prices on a wild ride. Wheat futures are up 15% as fertilizer costs spike. The Middle East supplies 22% of the world’s traded urea, a third of its helium, and nearly half of its sulphur.
But industrial metals? Aluminum is up just 8%. Copper is down 4%. Nickel is flat. The S&P GSCI Industrial Metals index hasn’t budged all year.
The disconnect comes down to demand expectations. Energy and agriculture are getting squeezed by supply shocks right now. Metals, on the other hand, are pricing in a much darker future: global stagflation.
Traders have been betting for years that soaring electricity demand would create copper shortages. But current supplies are plentiful. Chicago Mercantile Exchange warehouse stocks have rocketed from 85,000 tons at the start of 2025 to 536,000 tons today. A lot of that is from U.S. buyers stockpiling ahead of tariffs, but the point stands: there’s no shortage right now.
“The gap between speculators’ great expectations and the current reality yawns ever wider,” Reuters notes. Everyone’s talking about the copper supply crisis that’s coming in 2030. Nobody wants to pay up for what’s sitting in warehouses today.
Gold’s pullback tells the same story. After a two-year rally that saw it hit all-time highs in January, the yellow metal has dropped 16% since the Iran war began. That’s not what you’d expect during a geopolitical crisis. But gold is driven by real interest rates, and those are rising as central banks try to fight inflation. When government bonds start paying more, gold loses its shine.
The structural metals story could still come true. Major miners cut spending by a third between 2015 and 2022, and mines have long lead times. The consequences of that underinvestment will eventually show up. But “eventually” isn’t right now — and the market is pricing what’s in front of it, not what might happen in five years.
If you’re betting on commodities, the divergence matters. Energy and agriculture are responding to immediate supply shocks. Metals are stuck in a tug-of-war between future demand and present-day oversupply. Pick accordingly.
