To The Moon

Global concerns over the security of critical mineral supply chains have intensified. Spurred by supply shortage anxieties and expectations that political turmoil in Venezuela could accelerate a global scramble for key minerals, commodity markets exhibited significant volatility on Monday. Precious metals staged a strong comeback, with silver surging over 6% and gold approaching $4,500 per ounce, while industrial metals broadly advanced, with both LME and COMEX copper hitting fresh record highs. UBS Raises Gold Price Target to $5,000 On the first trading day of the week, spot gold prices surged more than 3% intraday, touching a high of $4,467 per ounce, coming within approximately $100 of the all-time high set in late 2025. New York gold futures prices also soared, reaching $4,480 per ounce. The US military action in Venezuela at the start of the new year marked Washington's most direct intervention in Latin America since 1989, subsequently triggering a sharp increase in demand for safe-haven assets. Notably, beyond the Venezuela situation, US President Trump reiterated his expansionist ambitions regarding Greenland and hinted at potential actions against illegal drug flows from Colombia and Mexico, while the latest developments in Iran also garnered widespread attention. Driven by frequent geopolitical conflicts and the Federal Reserve's monetary easing cycle, gold prices accumulated a 64% gain last year. Expectations for further Fed rate cuts, gold purchases by central banks, and inflows into gold ETFs collectively fueled the price ascent. Alexander Zumpfe, a precious metals trader at Germany's Heraeus Metals, stated, "The situation in Venezuela has undoubtedly reactivated market demand for safe havens, and this demand is layered on top of pre-existing concerns about geopolitics, energy supply, and monetary policy." A compilation of forecasts reveals that several leading investment banks predict gold prices will continue to climb this year, particularly against the backdrop of anticipated further Fed rate cuts and Trump's reshaping of the Fed's leadership. Last month, Goldman Sachs Group stated its base case expects gold to reach $4,900 per ounce, with risks skewed to the upside. UBS raised its gold price target for the year to $5,000. UBS Global Wealth Management's Chief Investment Office stated on Monday that it has raised its target prices for March, June, and September 2026 from $4,500 to $5,000 per ounce. "As concerns about US fiscal sustainability deepen, central banks and investors are likely to continue favoring physical assets like gold that carry no counterparty risk, suggesting steady demand growth for gold. Investment interest in gold ETFs is also expected to remain high. Should political or financial risks escalate further, gold prices could potentially surge to $5,400 (up from a previous target of $4,900). Gold remains a highly attractive asset and an important hedging tool within investment portfolios." COMEX silver futures for January delivery closed up a sharp 7.95%, reclaiming the $76 per ounce level. The driving force behind silver's rally is not solely safe-haven demand. Supply-demand dynamics are a significant factor. Silver boasts numerous industrial applications, and its demand is experiencing structural growth, particularly notable in the electric vehicle and solar panel sectors. Bank of America pointed out that the silver market has been in a supply deficit since 2021. Like all metals essential for the energy transition, silver faces the contradiction of "rising demand against difficult-to-rapidly-expand production capacity." Why is this the case? Because it takes approximately a decade from the decision to mine a new silver deposit to achieving first production. Last week, silver futures experienced volatility after breaking above $80, as the CME Group twice comprehensively raised performance margins for various metal futures, including gold and silver, triggering some profit-taking. Raising margins often acts as a catalyst for cooling market exuberance and inducing short-term corrections. However, potential policy decisions from the Trump administration regarding mineral tariffs represent a variable. It is reported that a substantial portion of the world's readily tradable silver inventory is currently stored in New York, and the market is closely watching the outcome of a US Commerce Department investigation—aimed at assessing whether key mineral imports threaten national security. The review's findings could pave the way for import tariffs and other trade restrictions on silver, platinum, and palladium. A recent survey conducted by online precious metals retailer Kitco showed that 57% of respondents expect silver prices to break above $100 per ounce next year. Another 27% of respondents forecast silver prices to trade between $80 and $100 per ounce in 2026. Platinum and palladium prices rose by 6.7% and 4.7%, respectively. The significant gains for these metals, which are core materials for automotive catalytic converters, primarily stem from tightening supply, uncertainty over tariff policies, and a rotation of investment demand from gold and silver into these metals. Industrial Metals Rally Collectively Industrial metals on the London Metal Exchange (LME) collectively advanced on Monday. LME copper surged over 4%, breaking above $13,000 per metric ton, while aluminum and zinc gained over 2%, and lead and nickel rose over 1%. Concurrently, the main copper contract on the COMEX in New York skyrocketed nearly 6%, surpassing the key psychological level of $6 per pound. Strong demand growth expectations from AI data centers and the electric vehicle sector propelled copper to a 40% gain last year, marking its best annual performance since 2009 and making it the top-performing industrial metal on the exchange. In 2025, production disruptions at major global copper mines like Indonesia's Grasberg and the Democratic Republic of Congo's Kamoa-Kakula fueled market concerns about supply. Entering the new year, these concerns persist, with recent strikes at Chile's Mantoverde copper mine exacerbating market anxiety. John Meyer, an analyst at UK broker SP Angel, stated, "Copper prices need to rise further to incentivize miners to significantly expand new production capacity. For years, many existing mines have been operating at full capacity or even well beyond initial design limits, significantly increasing the risk of major incidents, as evidenced by the tailings leak accident at the Grasberg mine." Although Venezuela is not a major refined copper producer, against a backdrop of elevated geopolitical worries, the overall supply security risks for global critical minerals have become more pronounced. Duncan Hobbs, Research Director at Concord Resources, noted, "In the new global order, critical minerals and supply chain security have become a market theme, and the latest developments in Venezuela amplify this narrative, contributing to the sustained rise in prices for various metals, including copper." Analysts at Citigroup forecast global refined copper production to reach 26.9 million metric tons this year, with a market deficit of 308,000 metric tons. Meeting future copper demand necessitates increased investment in new mine capacity, but this is contingent on copper prices remaining high. Calculations indicate that the break-even price for new-generation copper projects now exceeds $13,000 per metric ton. Compounding the situation, the potential for US tariffs on copper imports used in power and construction sectors is also heightening market volatility—a prospect that had previously attracted substantial copper inventories into the US, much of it from LME warehouses. The policy on copper import tariffs is still under review in the US, although copper was exempted from a batch of tariffs that took effect last August. As of January 2nd, total copper inventories in registered COMEX warehouses reached 453,450 metric tons, a staggering 400% increase from April of last year. This growth stems from traders and producers shipping copper to the US in advance to avoid potential tariffs. UBS noted that the US currently holds about half of the world's copper inventories but accounts for less than 10% of global consumption, implying a risk of reduced supply for the rest of the world. The persistent backwardation in the LME copper market—where spot prices trade at a premium to three-month futures—indicates near-term supply tightness.