Position for a commodity upcycle

18 September 2026, 12:43 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, particularly copper.

• Why now? 1) Gold may face near-term volatility Structural demand, geopolitical risks, and constrained following the Fed’s latest rate hike, though we supply support diversified commodity exposure, with believe its strategic investment case remains intact. copper offering particular appeal. Source: Robert Clark_Unsplash Investors with significant holdings may consider broadening commodity exposure beyond gold. 2) The still-unresolved US-Iran conflict underscores the importance of energy exposure. Declining inventories, stronger Chinese imports, and persistent risks to oil flows support a moderately constructive outlook. 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 Gold may face further near-term volatility following the We believe commodities can provide both a structural Federal Reserve’s latest rate hike, which could keep US real source of return and portfolio defensiveness in scenarios yields and the dollar elevated. However, we do not believe where higher inflation expectations challenge equities the strategic investment case has changed. Looking ahead, and bonds. While commodities have historically offered however, we believe central bank demand, continued valuable diversification benefits due to their relatively low diversification away from the US dollar, and global debt correlation with traditional asset classes, we also see a concerns will remain important structural supports. For supportive longer-term backdrop driven by electrification, investors with substantial gains following the strong rally rising power demand, AI infrastructure investment, and over the past year, higher prices may provide an opportunity supply constraints across several markets. In our view, to rebalance some exposure into other commodity sectors. investors should maintain diversified exposure across We continue to view gold as a useful strategic diversifier, precious metals, energy, industrial metals, and agriculture and we remain constructive on gold prices over the next 12 to capture a broad range of opportunities. Given fast- months. We see silver as less attractive on a relative basis. shifting leadership within commodity markets, we think an actively managed approach can help investors navigate the Energy commodity upcycle. The ongoing conflict between the US and Iran highlights the fluid nature of geopolitical events and how they can impact energy. With crude supply remaining restricted and both Gold sides escalating their military response, uncertainty over how

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

quickly shipping conditions and production will normalize is likely to keep energy markets sensitive. Stronger Chinese imports and continued risks to Middle Eastern oil flows add to the potential for near-term price gains. In our view, energy exposure can help protect against lingering supply uncertainty and inflation spillovers, while robust demand supports a constructive medium-term outlook.

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. The recent pullback in base metal prices offers an opportunity to gain exposure, in our view. While factors like tariffs and trade policy…