Global commodities: Gold rebounds from a seven-week low as commodity markets show mixed overnight moves
UBS reports a 1.5% rise in gold after a more than seven-week low, while weaker iron ore and oil contrast with steady copper. Its linked research maintains a constructive long-term view on iron ore pricing and premium-grade ore economics.
Summary
UBS reports a 1.5% rise in gold after a more than seven-week low, while weaker iron ore and oil contrast with steady copper. Its linked research maintains a constructive long-term view on iron ore pricing and premium-grade ore economics.
- Gold rose 1.5% to US$4,176.85/oz after reaching a more than seven-week low.
- Iron ore fell 0.9% to US$93.15/dmt amid rising port arrivals and weak steel demand ahead of China’s National Day holidays.
- Copper edged up 0.1% as a potential Chilean mine strike offset demand concerns.
- Brent fell 3.3% to US$102.59/bbl as signs pointed to recovering Middle East exports.
- UBS raised its long-term iron ore price assumption to US$93/t from US$85/t in real 2026 dollars, effective 2035.
Report Interpretation
Overview
This daily UBS commodities note reviews overnight price moves across bulk commodities, base and precious metals, energy, strategic minerals and foreign exchange. Gold recovered from a seven-week low, while iron ore and oil weakened; linked UBS research highlights a higher long-term iron ore price assumption and the importance of ore grade for premium producers.
Core views
Gold rose 1.5% to US$4,176.85/oz, or US$62.58/oz, after touching a more than seven-week low. Other precious-metal moves were mixed: silver gained 0.7% to US$61.42/oz and palladium rose 0.8% to US$1,223.95/oz, while platinum fell 0.5% to US$1,708.65/oz. Gold was down 3.5% month-to-date and year-to-date in the table. Bulk commodities were softer. Iron ore, 61% CFR North China, declined 0.9% to US$93.15/dmt as rising port arrivals and weak steel demand weighed on futures ahead of China’s National Day holidays. China iron ore futures were down 0.4% to CNY707.5/t. Metallurgical coal slipped 0.1% to US$272.40/t, while thermal coal was unchanged at US$141.21/t. In base metals, copper was broadly steady, up 0.1% to US$6.54/lb. UBS attributes this stability to the threat of a mine strike in Chile offsetting demand concerns. Aluminium and nickel each fell 1.2%, to US$1.46/lb and US$7.25/lb respectively; zinc was up 0.3%. Energy prices declined as indications of recovering Middle East exports pressured oil. Brent fell 3.3% to US$102.59/bbl and WTI fell 1.8% to US$85.49/bbl; JKM LNG declined 2.5% to US$25.44/mmbtu. Thermal coal was flat, while uranium fell 0.6% to US$89.30/lb. UBS’s linked iron ore research raises its long-term 61% CFR China price assumption to US$93/t in real 2026 dollars, effective 2035, from US$85/t previously. The stated rationale is a new demand phase shaped by China’s manufacturing exports and the emergence of the Global South’s roughly three billion people, alongside resilient cost-curve support. UBS also cites declining iron ore grades, around 800Mt of depletion through 2035, muted scrap use and weak-cycle capital expenditure that keeps supply growth disciplined. A separate linked UBS view expects iron ore markets to remain broadly balanced over the medium term, with benchmark prices supported by cost inflation and resilient though moderating steel demand. For CIA, UBS argues that ore grade rather than the outright benchmark price is the main differentiator: demand for premium steelmaking inputs, declining seaborne ore quality and more blending support attractive economics for ultra-high-grade ore producers. UBS sees potential for better premium capture as CIA’s Direct Reduction Pellet Feed facility ramps up.
Analysis framework
UBS first summarizes overnight price changes, then links the principal moves to immediate supply-demand catalysts: port arrivals and steel demand for iron ore, potential Chilean mine disruption for copper, and recovering Middle East exports for oil. The note also references UBS’s longer-term iron ore work, which combines demand, supply depletion, scrap use, cost-curve and product-grade considerations.
Methodology notes
Commodity supply-demand analysis
The note explains price moves and longer-term iron ore assumptions through steel demand, port arrivals, mine disruption, export recovery, depletion and disciplined supply growth.
Iron ore cost-curve support
UBS cites resilient cost-curve support and cost inflation as factors supporting benchmark iron ore prices.
DCF methodology for mining-sector valuations
UBS states that its mining-sector valuations use DCF, sometimes combined with EV/EBITDA.
Combined DCF and EV/EBITDA valuation
UBS states that mining-sector valuations may combine DCF with EV/EBITDA.
Key data
- GoldUS$4,176.85/oz+1.5% overnight; -3.5% month-to-date and year-to-date
- Iron ore, 61% CFR North ChinaUS$93.15/dmt-0.9% overnight; -6.4% month-to-date and -11.7% year-to-date
- CopperUS$6.54/lb+0.1% overnight
- Brent oilUS$102.59/bbl-3.3% overnight; +7.8% month-to-date and +68.7% year-to-date
- WTIUS$85.49/bbl-1.8% overnight
- Long-term iron ore price assumptionUS$93/tReal 2026 dollars, effective 2035; raised from US$85/t
Impact & implications
The report portrays commodity-market conditions as mixed in the near term: weak steel demand and higher port arrivals pressure iron ore, potential supply disruption supports copper, and recovering Middle East exports weigh on oil. UBS’s linked long-term iron ore work argues that supply discipline, depletion, cost support and changing demand patterns can support prices, while premium-grade ore may be better positioned than lower-grade supply.
Risks
- For mining-sector investments, UBS identifies volatility in commodity prices and currencies, as well as political, financial and operational risks that could materially affect company or industry performance.