Precious and Base Metals: Top Themes to Watch in 2025
Talking Point
- Gold tests its role as a hedge against the unknown – with plenty of that on the horizon
- Silver’s supply-demand prospects may feed into its penchant for volatility
- Aluminum and steel have connections to tariffs, while copper may prove yet another market drawing on AI
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The Calendar
As industry leaders and market analysts gathered for StoneX’s Natural Resources Day 3.0 in New York City, one session highlighted emerging trends and market dynamics for precious and base metals in 2025.
Among the key contributors, Rhona O'Connell, Head of Market Analysis, EMEA & Asia, and Michael Lovecchio, Managing Director of Institutional Equities, offered valuable insights into top metals, including gold, silver, aluminum, steel and copper.
Discover the top themes to watch in 2025 according to the panel of experts
Gold: The Ultimate Safe Haven for Uncertainty
During the panel “Gold & Silver,” Rhona O'Connell emphasized gold’s enduring role as a hedge against uncertainty. Persistent conflict, trade disputes, and growing tensions in Asia may further bolster gold’s appeal moving forward. She notes: “geopolitical risk is stronger in 2025 – that tapestry is yet to be woven.”
With geopolitical risks intensifying, trade tensions escalating, and systemic vulnerabilities in the global banking sector, gold remains the ultimate safe haven. Issues within small- to medium-sized banks, particularly those exposed to commercial real estate, continue to erode confidence and build the case for safety.
Further, she mentions the growth of unregulated transactions mirrors the prelude to the 2008 financial crisis. Although not predicting a global financial crisis, O’Connell notes heightened vulnerabilities in these unregulated markets which can spill over. Central banks increasing gold reserves signal to her a preference for stability amidst volatile markets.
The Federal Reserve, Jewelry Demand and Crypto Markets
Fed policies, particularly interest rates and balance sheet reductions, will be pivotal for gold prices in 2025. Reduced rate cuts and continued balance sheet shrinkage may pressure gold, leading to a pause in its rally unless official sector purchases unexpectedly increase.
Meanwhile, jewelry’s share of gold demand has dropped below its 10-year average for the first time, driven by sticky inflation, high interest rates, and reduced disposable income particularly in China and India.
Initially dismissed as a passing trend, crypto has established itself as a speculative asset class with significant investor interest. As a panelist noted, “crypto is eating gold’s lunch” in the speculative investment space, pulling away potential gold buyers.Despite setbacks like FTX, crypto thrives as a speculative alternative, attracting capital that might have otherwise gone to gold.
In 2025 and beyond, cryptocurrencies are expected to gain further traction, especially under the Trump Administration, with innovations like tokenized gold and silver assets blending traditional commodities with modern digital technology.
Silver: A Reputation for Volatility Well Earned
Silver, often overshadowed by gold and referred to by Rhona O’Connell as the “Cinderella Metal,” presents a complex narrative for 2025. Despite strong long-term fundamentals, this year could mark a transitional period due to macroeconomic headwinds.
The silver market faces mounting supply constraints, with only a fraction of its global output, approximately 23%, originating from primary mining. The majority comes as a by-product of base metals or industrial scrap, making it less responsive to surges in demand. That can raise issues as a panelist noted, the market is approaching a steep deficit, with last year alone recording a 1–2-million-pound shortfall.
Silver’s reputation for volatility remains intact. As a relatively small market, it is prone to sharp price movements, often driven by speculative trading and amplified by narratives around market manipulation. This dynamic makes silver both an exciting and risky asset for investors in 2025.If gold experiences a pause in its rally, silver, which often follows gold’s lead, could see its momentum stall despite strong fundamentals.
Aluminum: Facing Structural Shifts
The aluminum market is undergoing significant changes, shaped by surpluses, evolving recycling dynamics, and geopolitical influences. During the panel discussion “Steel & Aluminium - Trump 2.0,” panelists including Michael Lovecchio, Managing Director of Institutional Equities at StoneX, discussed what could come next in 2025.
Recycling Trends, Tariffs and Slowed M&A
U.S. recycling rates have declined significantly, now below 45% (down from over 60% pre-COVID) due to insufficient infrastructure in some regions and demographic shifts. In contrast, recycling rates are higher in Europe and China due to advanced recycling systems and policies that lead to higher efficiency.
Section 232’s tariff on aluminum and steel imports, enacted during Trump’s first administration in 2018, continues to challenge U.S. supply dynamics. Michael Lovecchio criticized the tariff, highlighting its disproportionate impact:
"I could understand the 25% tariff on steel to some extent, but the 10% tariff on aluminum didn’t make sense, especially considering that the U.S. imports 80% of its aluminum needs.”
Canadian imports are likely to remain essential in 2025, while adjustments to Asian imports could reshape supply chains. Tariffs could exacerbate supply constraints without fostering sufficient domestic production.
Aluminum M&A activity has lagged compared to other metals, with little appetite for consolidation due to lower returns on investment and cautious sentiment. “We’ve seen significant M&A activity in the steel, copper, and precious metals sectors, but there’s been relatively little movement on the aluminum front,” Michael Lovecchio explained.
This lack of consolidation may hinder innovation and competitiveness in the aluminum industry compared to more dynamic sectors like steel and copper.
Steel: Environmental Changes, Utilization Rates and Trade Pressures
Michael observed that over the last five years, the global steel industry has strongly shifted toward EAFs (Electric Arc Furnac) while moving away from blast furnaces. This transition aligns with a focus on sustainability and efficiency. Despite a significant global decline in scrap prices, EAF margins have remained strong, supported by high utilization rates.
EAF production remains resilient, driven by sustainability goals and the need for high-quality scrap in automotive-grade steel production.
U.S. steel mill utilization rates have been hovering around 74%, a level below the industry ideal of 80%-85% reflecting subdued demand and overcapacity. Utilization rates below the industry ideal suggest underutilized capacity, which can lead to inefficiencies and potential financial pressures for steel producers.
Here again, Section 232 tariffs and anti-dumping measures remain pivotal, particularly for galvanized steel imports. The impact of policy adjustments will ripple through pricing and supply chains as the Trump Administration comes in for its second term. Domestic producers may gain from further import restrictions, particularly on galvanized steel, while global oversupply presents challenges.
Copper: Green Energy and AI
The copper market is experiencing a delicate balance between demand driven by the energy transition and supply-side challenges. Panelists noted the growing role of copper in the green energy and digital transitions, and these shifts are critical demand drivers. Demand for copper is tied closely to the energy transition and electrification. China remains a pivotal player, and its policies on EVs and infrastructure will significantly impact global demand.
The copper market faces a looming structural deficit driven by the lack of new mining projects and the long lead times required to bring new capacity online. During the panel, multiple speakers discussed the difficulty of opening new mines due to jurisdictional risks, increasing costs, and long development timelines (up to 15 years). At current prices, it could take over 20 years to recover initial capital for new mining projects.
High copper prices could accelerate substitution with other materials, particularly aluminum, which would alter the demand landscape. There is a real potential for substitution when copper prices reach certain thresholds, with aluminum being a primary alternative.
With trade and recycling factors more traditional considerations for 2025, a more unique factor may be the increasing electrical demand of global GDP ahead. With the powering of economy further boosted by AI and energy transition technologies, there may be a secular demand surge for copper.
There is a strong link between copper demand and electricity usage, predicting significant growth in applications like AI-driven robotics, EVs, and infrastructure.
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---Written by: Anne Lamedica, Copywriter Team Lead
---Experts: Rhona O'Connell, Michael Lovecchio
