The nonferrous metals sector in 2025 was considered a "star performer," with prices of core varieties such as gold, silver, copper, aluminum, and rare earths hitting new cyclical highs. Data Source: Wind. Timeframe: 2025/1/2 - 2025/12/31. Risk Warning: Past performance of an index is not indicative of its future results. However, the market sentiment has shifted abruptly in recent days, with international metal markets experiencing a dramatic roller-coaster ride; the international gold price, in particular, recorded its largest single-day drop in 40 years. This sharp decline has left the market perplexed: Why did the strong 2025 rally come to such an abrupt halt? Is this a cyclical peak or merely a short-term correction?
The violent fluctuations in nonferrous metals prices are driven by a combination of macroeconomic factors and shifts in market supply and demand dynamics.
After substantial gains, with the nonferrous metals sector surging over 90% in 2025 and continuing to post strong advances into 2026, profit-taking has emerged. Taking spot gold as an example, it had risen for eight consecutive trading days prior, with a monthly cumulative increase exceeding 23%; silver has surged over 60% year-to-date (Source: Wind, as of 2026-01-30; past performance is not indicative of future results). Having accumulated substantial profits, some capital has chosen to "cash in," triggering a pullback in certain commodities.
Subtle changes in the global macroeconomic environment have exacerbated market volatility: on one hand, U.S. December CPI data rebounded more than expected, leading markets to scale back their expectations for Federal Reserve rate cuts from three to two for the year. Should the U.S. dollar index strengthen subsequently, it could potentially suppress metal prices.
It is noteworthy that this downturn also exhibits a clear emotional amplification effect. Instances like "selling property to buy silver" in 2025 attracted many retail investors to blindly follow the trend, with numerous participants entering the market at elevated price levels and lacking risk hedging awareness. Furthermore, exchanges raising margin requirements for certain commodities to mitigate risk has intensified short-term liquidity tightness, leading to an overshoot in price declines.
While the aforementioned factors are more indicative of short-term disturbances, has the fundamental underlying logic for nonferrous metals undergone any significant change?
The core investment thesis for nonferrous metals rests on a confluence of supportive supply-demand dynamics and macroeconomic trends.
Expectations for accommodative liquidity are driving global capital towards physical assets. The Federal Reserve's cumulative 75 basis points of rate cuts in 2025 and the subsequent sustained weakness in the U.S. dollar index have significantly enhanced the appeal of dollar-denominated metal assets. Although the Fed has currently paused its easing cycle, the broader context of a long-term rate-cutting trajectory remains intact. For gold, lower interest rates reduce the opportunity cost of holding it, prompting a shift of funds away from dollar-denominated assets. For base metals, ample liquidity is expected to bolster expectations for a global economic recovery, thereby stimulating industrial demand.
A fundamental supply-demand imbalance, characterized by structural shortages for some metals, underpins the strength in both base and new energy metals. On the supply side, traditional metals like copper and aluminum face challenges such as scarce mine resources and slow progress in commissioning new capacity; global supply growth rates for electrolytic copper and aluminum have long trailed demand growth. Cobalt supply is affected by reduced output policies in the Democratic Republic of Congo, potentially making global shortages commonplace from 2026-2027. Tungsten, as a strategic minor metal, is subject to China's total mining control, suggesting its supply deficit will persist. On the demand side, the energy transition is a primary driver, with new energy vehicles, energy storage, and grid expansion fueling a surge in demand for metals like copper, aluminum, lithium, and cobalt. BloombergNEF predicts a potential copper deficit of 19 million metric tons by 2050 if no new capacity is added.
Rising risk aversion is highlighting gold's role as a "safety net." Factors such as global geopolitical conflicts and uncertainties surrounding economic recovery continue to fuel market避险 sentiment. From tensions in the Red Sea to slowing global economic growth, increasing investor concern over risk assets has solidified gold's status as a traditional safe-haven, attracting capital seeking a "port in the storm."
Overall, the Federal Reserve remains on a potential easing path, providing a accommodative backdrop; heightened geopolitical uncertainties are boosting safe-haven demand; and demand from emerging industries for nonferrous metals continues to grow. The fundamental investment logic for nonferrous metals has not significantly deteriorated. However, this does not imply the absence of short-term market risks; vigilance against speculation and liquidity risks is still warranted.
Primarily, the nonferrous metals futures market involves high leverage and experiences sharp price swings. Investors should implement robust risk control measures, avoiding excessive leverage and the practice of chasing rallies and selling during panics. Prices can overshoot significantly when market sentiment reverses.
Secondly, the risk associated with ETF premiums is often overlooked. During fervent market conditions, the secondary market trading prices of popular nonferrous metals ETFs can trade at a substantial premium to their Net Asset Value (NAV). If market enthusiasm cools, these premiums can rapidly narrow, potentially leading to losses for investors even if the underlying NAV remains stable—a scenario where "the NAV doesn't fall, but the trading price drops." It is advisable to compare an ETF's secondary market price with its NAV before purchasing; exercise caution when the premium exceeds 5%, and prioritize large, liquid ETF products.
Finally, the risk of liquidity contraction should not be underestimated. When market sentiment shifts and capital exits en masse, less mainstream nonferrous metal varieties or over-the-counter products might face liquidity crunches, making them difficult to sell. It is recommended to avoid allocating to niche products with low trading volumes and dispersed holdings. Instead, prioritize actively traded spot market leaders and maintain some cash reserves to manage unexpected liquidity risks.
The sharp decline in nonferrous metals at the beginning of 2026 does not signify a fundamental reversal. The core drivers—supply-demand mismatches and macroeconomic accommodation—remain intact, suggesting the sector may be entering a new phase of "structural differentiation." For investors, there is no need to panic over short-term volatility, nor should one blindly chase rallies.
If your risk tolerance is low and you find it difficult to withstand sector-wide fluctuations and adjustments, it may be prudent to patiently wait for clear signals of stabilization after the pullback before considering entry. If you are focused on long-term positioning, can endure short-term paper losses, and believe in the enduring value of strategic metals driven by sustained demand from new industries, then the current correction window could present an opportunity to establish positions gradually at relatively lower levels. Additionally, considering a systematic investment plan (dollar-cost averaging)—investing a fixed amount regularly—can help average down entry costs, allow for calmly accumulating positions during market volatility, and reduce the challenges of timing the market and emotional interference.
In summary, investment opportunities within the nonferrous metals sector in 2026 have not vanished, but short-term volatility and uncertainty persist. A long-term allocation perspective is crucial for assessing its investment value, rather than engaging in short-term speculation.
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