Daily commodity markets: Gold rebounds from a seven-week low as oil and iron ore weaken

Overview

This daily UBS commodities update covers overnight moves across bulk commodities, base metals, precious metals, energy and strategic minerals. The central market developments were gold’s rebound from a seven-week low, softer oil prices, weaker iron ore, and stable copper.

Core views

Gold rose 1.5% to US$4,176.85/oz after falling to a more than seven-week low. Other precious metals were mixed: silver gained 0.7% to US$61.42/oz and palladium rose 0.8% to US$1,223.95/oz, while platinum declined 0.5% to US$1,708.65/oz. The note does not provide a further fundamental explanation for gold’s rebound. Bulk commodities softened. Iron ore 61% CFR North China declined 0.9% to US$93.15/dmt, while China iron ore futures fell 0.4% to CNY707.5/t. UBS attributes the weakness to rising port arrivals and weak steel demand as the market approaches China’s National Day holidays. Metallurgical coal was nearly unchanged at US$272.40/t, while thermal coal was unchanged at US$141.21/t. Base-metals performance was mixed. Copper edged up 0.1% to US$6.54/lb because a potential mine strike in Chile offset demand concerns. Aluminium and nickel each declined 1.2%, to US$1.46/lb and US$7.25/lb respectively, while zinc rose 0.3% to US$1.75/lb. Energy prices fell as indications of recovering Middle East exports outweighed other factors. Brent crude declined 3.3% to US$102.59/bbl and WTI declined 1.8% to US$85.49/bbl. JKM LNG fell 2.5% to US$25.44/mmbtu. Uranium declined 0.6% to US$89.30/lb. In linked UBS research, the institution raised its long-term iron ore price assumption to US$93/t for 61% CFR China in real 2026 dollars, effective 2035, from US$85/t. UBS bases the change on a new demand phase led by China’s manufacturing exports and the Global South’s roughly three billion people, plus resilient cost-curve support and constrained supply growth. The supply argument includes declining iron ore grades, around 800Mt of depletion to 2035, muted scrap use and weak-cycle capital expenditure. A separate linked UBS view on Champion Iron argues that iron ore markets should remain broadly balanced over the medium term, with benchmark prices supported by cost inflation and resilient though moderating steel demand. UBS considers ore grade, rather than the outright iron ore price, the key differentiator: demand for premium steelmaking inputs, declining seaborne ore quality and greater blending requirements could support ultra-high-grade producers. It highlights the potential for improved premium capture as Champion Iron’s Direct Reduction Pellet Feed facility ramps up.

Analysis framework

UBS summarizes overnight price moves and links each major move to a stated near-term supply, demand or export driver. It also references longer-term iron ore research using demand trends, cost-curve support, ore-quality trends, depletion and supply discipline to frame price and grade differentiation.

Methodology notes

• Valuation methodsDCF (Discounted Cash Flow)

  Discounted cash flow valuation

  UBS states that its mining-sector valuations use DCF, or a combination of DCF and EV/EBITDA, to estimate value from projected business cash flows and operating assumptions.

• Industry AnalysisSupply-demand framework

  Commodity supply-demand analysis

  The iron ore discussion assesses prices through demand sources, supply depletion, grade trends, scrap usage, capital expenditure and cost-curve support.

• Industry AnalysisCost curve analysis

  Cost-curve support

  UBS cites resilient cost-curve support and cost inflation as factors supporting benchmark iron ore prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Champion Iron

  UBS identifies product grade rather than benchmark iron ore prices as the key differentiator and highlights potential premium capture as its DRPF facility ramps up.

  Strengths

  Premium-grade product suite and potential to benefit from growing demand for premium steelmaking inputs.

  Comparison

  UBS views ultra-high-grade producers as structurally advantaged relative to lower-grade iron ore suppliers.

  Risks

  Benchmark iron ore prices and steel demand may moderate.

Key data

• GoldUS$4,176.85/oz+1.5% overnight after reaching a more than seven-week low
• 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 crudeUS$102.59/bbl-3.3% overnight
• WTI crudeUS$85.49/bbl-1.8% overnight
• UBS long-term iron ore assumptionUS$93/tReal 2026 dollars, effective 2035; raised from US$85/t

Impact & implications

The update points to diverging near-term commodity drivers: weaker steel demand and higher port arrivals pressured iron ore, potential Chilean supply disruption supported copper, and recovering Middle East exports weighed on oil. UBS’s linked longer-term work argues that iron ore price support and grade premiums could persist despite broadly balanced markets.

Risks

• UBS notes that mining investments are exposed to volatile commodity prices and currencies.
• Political, financial and operational risks can materially affect mining company and industry performance.