Commodity cages that matter
Bouncing crude oil has usurped gold at the top of the commodity radar nearing the end of 1H, but may accelerate price-elasticity forces. Downward estimate revisions for global crude demand and upward for supply could gain fuel from the price spike. Enduring production disruptions appear as unlikely as $100 a barrel WTI crude vs. gravitation toward US break-even costs closer to $50. For crude and economically sensitive copper to remain buoyant, US stock market capitalization might need to persist above 2x GDP.
Record-setting gold appears to be detecting the limits of elevated equities and $100,000 Bitcoin. If risk assets stay lofty, the metal may fall toward $3,000 an ounce. However, it's the potential to rise above $3,500 that we find disconcerting — a slight beta pullback may be all it takes.
Gold vs. everything else
Gold's $3,500 resistance, WTI oil's $80: Which is more enduring?
Whether WTI crude oil can stay above $80 a barrel after bottoming around $55 in April is a key commodity question for 2H. Our bias is it's a crude bear market, and the bounce may provide producers better levels to hedge. Higher prices would add headwinds to a global economy facing tariffs. Gold appears on track to breach $3,500 an ounce resistance, especially if US stocks decline.
Commodities may have bottomed vs. US stocks
If the dollar keeps falling in 2H, gold is poised to continue leading broad commodity gains. However, it's the ebbing-tide risks of US stocks dropping for a recession that didn't come in 2023 that are fueling the metal as the world contends with unprecedented US tariffs. Up about 10% in 2025 to June 20, the Bloomberg Commodity Spot Total Return Index has been underpinned by a similar fall in the Bloomberg Dollar Spot Index. What's different may be the increasing strain on the US stock-market cap to keep rising above 2x GDP, to avoid a typical pattern of deflation following inflation.
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