Bullion was the asset that benefited most due to the tariff war. Gold in the key London spot market is hovering above the psychological level of $3,000 an ounce, gaining more than 15 percent so far this year. Similarly, Indian gold prices also gained considerably, with the MCX futures prices trading at a lifetime high of ₹88,800 per ten grams last week.
As a traditional safe haven during periods of economic instability, the recent threat of a trade war heightened concerns about inflation and economic growth across the globe, boosting demand for gold. Additionally, domestic gold was further boosted due to prevailing high demand and a weak Indian Rupee.
The price performance of silver was also notable. It has gained over 17 percent this year in the overseas market, with domestic prices hovering above ₹1,00,000 per kg last week.
In addition to bullion, base metal prices also rose considerably. Trade wars, particularly those involving tariffs, can significantly impact industrial metal prices by creating uncertainty, potentially slowing global economic growth, and disrupting supply chains, leading to both short-term volatility and long-term shifts in demand and price.
Copper and aluminium prices have recently surged to new highs, reaching ten-month and three-year highs, respectively. This surge was driven by increased demand from China and a weaker U.S. dollar, with expectations of further gains due to potential U.S. tariffs and a mine supply shortfall.Copper’s ability to serve as an indicator of economic health has been disrupted by Trump’s changing tariff policies and the global trade war. Copper prices in domestic futures rose about 15 percent this year and increased more than 23 percent over the last 12 months. A similar price performance was witnessed in its benchmark overseas markets as well.Aluminium was the top gainer in the base metal segment. It jumped to ₹268 per kg in the futures market, gaining over 27 percent in 2025. In the last one-year period, it gained over 31 percent due to positive fundamentals like increased demand from China and concerns over supply bottlenecks.
Zinc and lead prices also traded in positive territory, but gains were limited in both domestic and overseas markets.
However, the trade war has had little effect on crude oil prices. Oil was the only commodity to trade negatively in the first quarter of this year. The most traded U.S. WTI futures edged lower by 8 percent this year, while domestic prices eased by 7 percent. This was due to expectations that a weak global economy may lead to a decline in energy demand and a balanced global supply.
Natural gas prices remained steady, posting moderate gains. The commodity is gaining traction primarily due to a combination of factors, including increased demand for heating and expectations of reduced supply.
Looking ahead, commodity prices are expected to remain volatile primarily due to concerns over demand. Easing tensions in the Middle East and a ceasefire between Russia and Ukraine may have a positive impact on the global economy, but the uncertain trade policies of the Trump administration may harm economic growth worldwide.
(Hareesh V is Head of Commodities at Geojit Investment Services)
