How high can commodities go as markets grapple with a riskier world?

Things are getting a bit chaotic out there and not just on the trading floors. Between missile strikes deep inside Russia and fresh trade war rumblings from Donald Trump, markets are getting twitchy. And in classic fashion, when the world gets wobbly, commodities get lively.

Gold’s glinting again, silver’s stealing the spotlight, and investors are quietly preparing for the worst. With geopolitical tension back on the front burner and global diplomacy looking shaky, this rally in hard assets might just be getting started.

Gold is back in Vogue as the ultimate safety blanket

Gold’s not just sitting pretty - it’s shining. Prices jumped more than 2% at the start of the week, climbing to a three-week high. What’s driving it? A heady mix of market nerves, a softening US dollar, and fading faith in stability. When things turn messy,  be it war, inflation, or banking wobbles, gold is still the classic “get me out of here” trade.

Right now, there’s plenty to worry about. Tensions are rising between the US and China, Ukraine’s getting bolder with strikes inside Russia, and central banks are increasingly hinting at rate cuts. For gold, that’s a dream scenario. It doesn’t pay interest, so when rates fall, holding it becomes a lot more attractive.

But there’s a deeper shift happening, too. Investors aren’t just fretting about inflation or slowing growth anymore they’re starting to price in a world that might just stay risky for longer. And in that kind of world, gold thrives.

Silver’s not just tagging along - it’s taking the lead

Gold might get the headlines, but silver is having a moment of its own - and it’s not just riding gold’s coattails. It’s moving on its own merits.

Silver’s in a unique spot. It’s part safe haven, part industrial workhorse - used in everything from electronics to solar panels and electric vehicles. So when the world feels jittery and supply chains start to look fragile, silver gets a double boost.

One of the big triggers this week? 

Donald Trump’s fiery claim that China has “totally violated” a trade deal made in Geneva. 

Source: Truth Social

The details are murky, but it centres on China allegedly dragging its feet on rare earth mineral supplies - key ingredients for high-tech manufacturing and EV production.

Cue market panic. If rare earths are getting harder to come by, manufacturers may look elsewhere to keep production going and that’s where silver steps in. Already in high demand, the metal’s getting an extra push from fears of tech supply disruptions.

So, while gold rises on fear, silver’s rallying on something arguably more powerful: demand.

Let’s not forget copper, the bellwether of global industry. It jumped nearly 6%, fuelled by growing concern over US tariff threats and a sliding dollar. If the trade spat escalates, copper, used across infrastructure and manufacturing, could see even tighter supply and higher prices. 

This isn’t just about precious metals anymore. Industrial commodities are riding the same wave.

A weaker dollar, a stronger case for metals

Adding fuel to the fire, the US dollar is losing steam. When the dollar drops, commodities priced in dollars, like gold and silver, naturally gain value, especially from overseas buyers.

Source: Bullion Via LBMA, Investing.com

Central banks are also lining up with more dovish signals. The European Central Bank is widely expected to cut rates this week, and over in the States, Federal Reserve officials (yes, even the usually hawkish ones like Christopher Waller) are hinting that cuts could come by year-end.

Lower interest rates make non-yielding assets like gold more appealing, and they could also stoke inflation, a double win for precious metals. 

Classic playbook: weak dollar, soft central banks, rising global tensions - and metals take the crown.

Risky world, reactive markets

All of this is bubbling up just as markets brace for a tricky few weeks. We’ve got rate decisions, inflation prints, and a key US jobs report on the docket, any of which could tilt sentiment fast.

There’s also speculation about a potential call between Trump and China’s President Xi to rescue flailing trade talks. But markets aren’t holding their breath for diplomatic niceties. They want action, not platitudes.

And that’s the crux of it - this isn’t just political noise anymore. It’s about economic fault lines with real-world consequences. From energy corridors in Eastern Europe to the metals fuelling our tech and transport revolutions, the risks are no longer theoretical.

They’re baked into the system, and for commodities, that might just mean the rally has legs.

Gold price technical insights: Spike or the start of a supercycle?

So how high can commodities go from here? That depends on whether the world continues down its current path of confrontation and caution. If geopolitical risk escalates, whether from more aggressive moves in Ukraine, worsening China-US relations, or further strain on global supply chains, there’s every reason to believe gold and silver have more room to run.

But commodities are famously fickle. A surprise truce, unexpected economic data, or a hawkish shift from central banks could quickly flip the narrative. For now, though, the momentum is clear: hard assets are in demand, not just as a hedge against inflation or currency weakness but as insurance against a world that feels increasingly unstable.

In times like these, investors aren’t just buying metals - they’re buying peace of mind.

At the time of writing, gold is seeing a slight retreat after a significant uptick. The retreat is happening within a buy zone, which makes the case for a resumption in bullish price action. The volume bars showing some bullish bias over the past few days adds to the bullish narrative. 

Should the price uptick materialise, we could see a surge toward the $3,500 all-time high. If we see a slump, prices could find support floors at the $3,250 and $3,160 price levels.

Source: Deriv MT5

The information contained within this article is for educational purposes only and is not intended as financial or investment advice. The performance figures quoted refer to the past, and past performance is not a guarantee of future performance or a reliable guide to future performance. The information may become outdated. Do your own research before making any trading decisions.