Position for a commodity upcycle

21 August 2026, 11:39 UTC Chief Investment Office GWM Investment Research

Position for a commodity upcycle Position for a commodity upcycle Author: Sagar Khandelwal, Strategist, UBS Switzerland AG

• Why? 1) Commodities have historically exhibited low correlations with equities and bonds, offering a differentiated source of return in portfolios. 2) Commodities can help protect against supply shocks, geopolitical stress, and inflation spillovers. 3) Structural demand from AI infrastructure, electrification, and the energy transition supports a positive long-term case for industrial metals.

• Why now? 1) Gold prices have climbed higher in Diversified commodity exposure can support long-term August, giving investors with significant holdings an returns and portfolio resilience amid inflation, energy opportunity to broaden commodity exposure beyond disruptions, and structural demand from electrification and AI. Source: Robert Clark_Unsplash traditional "safe-haven" assets. 2) The still unresolved conflict between the US and Iran underscores the importance of energy exposure, while a recovery in production may take longer than expected. 3) Near- term catalysts across agriculture and industrial metals strengthen the case for broader exposure today, with El Niño-related risks supporting agriculture and AI-linked demand keeping metals resilient.

Position for commodity upside however, we believe central bank demand, continued We believe commodities can provide both a structural diversification away from the US dollar, and global debt source of return and portfolio protection in scenarios concerns will remain important structural supports. For where higher inflation expectations challenge equities investors with substantial gains following the strong rally and bonds. While commodities have historically offered over the past year, higher prices may provide an opportunity valuable diversification benefits due to their relatively low to rebalance some exposure into other commodity sectors. correlation with traditional asset classes, we also see a We continue to view gold as a useful strategic diversifier, supportive longer-term backdrop driven by electrification, and we remain constructive on gold prices over the next 12 rising power demand, AI infrastructure investment, and months. supply constraints across several markets. In our view, investors should maintain diversified exposure across Energy precious metals, energy, industrial metals, and agriculture The ongoing conflict between the US and Iran highlights to capture a broad range of opportunities. Given fast- the fluid nature of geopolitical events and how they can shifting leadership within commodity markets, we think an impact energy. With crude supply remaining restricted and actively managed approach can help investors navigate the both sides facing constraints in reaching a compromise, commodity upcycle. uncertainty over how quickly shipping conditions and production will normalize is likely to keep energy markets Gold sensitive. In our view, energy exposure can help protect Gold has resumed its upward trend as US inflation concerns against lingering supply uncertainty and inflation spillovers, have ebbed, and markets have reined in expectations while robust demand supports a constructive medium-term for near-term Federal Reserve rate hikes. Looking ahead, outlook.

This report has been prepared by UBS Switzerland AG. Please see important disclaimers and disclosures at the end of the document.

Position for a commodity upcycle

Industrial metals Industrial metals, such as copper, have benefited from secular demand drivers such as electrification, the energy transition, and the ongoing global buildout of AI infrastructure. Prices have remained resilient despite periodic global economic growth worries. While factors like tariffs and trade policy risks may keep prices volatile in the near term, demand trends remain constructive for the asset class over the longer term. In copper specifically, supply constraints and projected market deficits reinforce our positive longer-term outlook.