How high can commodities rally on trade and risk?

It’s getting noisy out there, and not just on the trading floor. From missile strikes deep inside Russia to renewed tariff threats from Donald Trump, markets are once again on edge. As tensions flare, commodities are stealing the spotlight.

Gold is glinting, silver is surging, and investors are quietly pricing out peace. With geopolitical risk back in focus and global diplomacy wobbling, the rally in hard assets may be far from over.

Gold reclaims its safe haven asset crown

Gold prices surged more than 2% at the start of the week, hitting a three-week high. The trigger? 

A perfect storm of falling confidence, a softening dollar, and a market that’s clearly on edge. For many investors, gold remains the go-to shield when things get messy - be it war, inflation, or financial instability.

The latest tensions between the US and China, paired with Ukraine’s increasingly bold strikes on Russian soil, have reignited demand for traditional safe-haven assets. Throw in the likelihood of lower interest rates from major central banks, and gold has found solid ground to rally. Remember, gold doesn’t pay interest - so when rates fall, the opportunity cost of holding it falls too, making it more appealing.

But beyond monetary policy and macro sentiment, gold is also benefiting from a broader narrative shift: markets aren’t just worried about inflation or economic growth anymore - they’re pricing in the possibility of a structurally riskier world.

Silver industrial demand steps into the spotlight

While gold often leads the headlines, silver is quietly stealing the show. It’s not just tagging along - it’s rallying on its own merits. Silver sits at a unique intersection: it acts as both a haven in turbulent times and a workhorse in the industrial world. That makes it especially sensitive to supply chain fears, and right now, those fears are mounting.

A major catalyst? Donald Trump’s weekend accusation that China has “totally violated” a trade agreement made in Geneva. 

While details were thin, reports point to China’s failure to fast-track its rare earth mineral commitments, materials vital to high-tech manufacturing, especially in electric vehicles. Trump’s comments didn’t just stir the pot - they reignited concerns about global access to key components that the auto and tech sectors depend on.

And that’s where silver comes in. With rare-earth magnets in potentially short supply and automakers already warning of possible production shutdowns, demand for silver - used heavily in EVs, electronics, and solar tech, is getting an added lift. It’s not just about fleeing risk, it’s about front-running disruption.

With silver benefiting from both safe-haven flows and a budding industrial squeeze, it’s little wonder the metal is rallying alongside gold - and in some ways, for even more compelling reasons.

Copper also joined the rally, jumping nearly 6% as investors braced for potential U.S. tariffs on the industrial metal and a weaker dollar added momentum. The surge reflects mounting concern over trade-linked supply shocks extending beyond just precious metals.

The dollar is weakening as metals gain ground

At the same time, the dollar is weakening, giving commodities another leg up. A softer greenback tends to lift dollar-priced assets like gold and silver, making them more attractive to international buyers. 

Add to that the growing expectation of rate cuts from major central banks, and the conditions are lining up neatly for a metals rally.

The European Central Bank is widely tipped to cut rates this week, and several US Federal Reserve officials, including Christopher Waller, have hinted that easing could come before the end of the year. Lower rates reduce the opportunity cost of holding non-yielding assets like gold, while also potentially fuelling inflation - a double boost for precious metals. 

It’s a classic formula: geopolitical tension plus dovish central banks equals gold strength. Silver, with its dual narrative, just gets an added layer of momentum.

Geopolitical risk meets market uncertainty

All of this is unfolding as investors brace for a particularly tense few weeks. Alongside rate decisions and inflation updates, the markets are waiting on a key US jobs report, which could further sway monetary policy expectations. There’s also talk of a potential call between Trump and Chinese President Xi Jinping to rescue stalled trade talks. But at this point, markets seem less interested in words and more focused on action - or the lack of it.

The concern isn’t just about diplomacy failing - it’s about strategic breakdowns with economic consequences. From energy corridors in Eastern Europe to the minerals that power next-gen tech, the stakes are no longer just political - they’re logistical, financial, and deeply embedded in the global economy.

Gold price technical insights: Spike or the start of a supercycle?

So how high can commodities go from here? That depends on whether the world continues down its current path of confrontation and caution. If geopolitical risk escalates, whether from more aggressive moves in Ukraine, worsening China-US relations, or further strain on global supply chains, there’s every reason to believe gold and silver have more room to run.

But commodities are famously fickle. A surprise truce, unexpected economic data, or a hawkish shift from central banks could quickly flip the narrative. For now, though, the momentum is clear: hard assets are in demand, not just as a hedge against inflation or currency weakness but as insurance against a world that feels increasingly unstable.

In times like these, investors aren’t just buying metals - they’re buying peace of mind.

At the time of writing, gold is seeing a slight retreat after a significant uptick. The retreat is happening within a buy zone, which makes the case for a resumption in bullish price action. The volume bars showing some bullish bias over the past few days adds to the bullish narrative. 

Should the price uptick materialise, we could see a surge toward the $3,500 all-time high. If we see a slump, prices could find support floors at the $3,250 and $3,160 price levels.

How high can gold rise? You can speculate on the price of the yellow metal with a Deriv X and a  Deriv MT5 account.