Metals Soar in Early 2025, But is it Sustainable?

Metals soared higher during early 2025, but uncertainty surrounding monetary policy and the ramifications of trade tariffs have stirred up analyst expectations.

China's Economic Turnaround

The precious and base thanks to two distinct factors. Demand for industrial metals, specifically copper, ticked up due to economic stimulus measures announced by Beijing. This boosted prices higher as investors started to price in an economic turnaround in China. Nonetheless, prices of metals that relied heavily on Chinese demand experienced substantial volatilty throughout last year due to the impact of several new stimulus announcements. Still, recent reports indicating that and accelerated in the final quarter of the year have reinforced the perception of a potential economic turnaround.

Concurrently, on Wednesday. While headline consumer prices rose at a slightly accelerated pace, it came as expected. The unexpected drop in core inflation, though, provided relief around the timing and size of potential rate cuts by the Fed in 2025. This increased bets of rate cuts to 40 basis points from 31 basis points prior to the release. As a result, the subsequent decline in yields boosted both silver and gold prices, while a weaker dollar lent support to commodity prices overall.​

Two Different Roads Forward

Analysts express uncertainty around the sustainability of price gains in the forthcoming year. On the one hand, safe havens like gold may become more appealing due to increased uncertainty as there is a consensus that the will make gold a reliable store of value in the long run. However, in the short run, the resulting volatility could impact industrial metals once President Trump takes office and confirms tariffs. Copper, in particular, might be vulnerable to the effects of slowing trade from increased tariffs, although the impact may not be felt until the second quarter due to China's current smelter overcapacity.

Wells Fargo argues that , citing demand outpacing supply. This is contingent on improved global economic dynamism, facilitated by the pro-business regulatory environment expected under the Trump administration and increased stimulus programmes from China, which could outweigh the negative impact of tariffs.​

Silver iH&S Still Ongoing

Silver trades sideways between $29.10-$33.30 per ounce currently, which may persist in the near term while prices remain below the peak. Yet, its measured-move projection to $36.70 arising from a long-term inverse head-and-shoulders (H&S) pattern has yet to be completed. The retest of $30 also points to further upside, though losing this support could accelerate price declines towards $26.50 and lower. On the other hand, reclaiming the $35 handle could guide prices towards the projection unless the recent formation turns into a wedge pattern.

Source: SpreadEx / Silver

Metals surged during the first days of 2025 on the heels of expected economic stimulus measures in China and cooling US inflation. While precious metals benefited from expectations of potential rate cuts by the Fed, industrial metals witnessed increased demand from China's potential economic turnaround. Analysts still express uncertainty about the sustainability of the gains, though, citing volatility from trade tariffs and fiscal challenges faced by the US. Silver, however, shows a long-term inverse head-and-shoulders pattern, suggesting further upside potential. Despite the positive outlook for metals, additional gains remain contingent on improved global economic dynamism and the impact of pro-business policies under Trump.