Commodity Markets Soar as Rate Cut Speculations Fuel Record Rally

Commodity markets are experiencing a remarkable surge, ignited by the US Federal Reserve’s recent interest rate cuts. This dynamic rally, initially led by precious metals, is now poised to expand into base metals like copper and aluminium in 2026, promising substantial gains for investors.

Since the Federal Reserve initiated its first rate cut of 2025, commodity markets have been on fire. A key index tracking 24 energy, metal, and agricultural futures is on track for its strongest monthly close in three years, boasting a 9.3% gain this year—outpacing last year’s 5.4% increase. The anticipation of another rate cut in October, with an 80% probability, is expected to amplify these gains further, driven by political pressures influencing investor sentiment and adding a risk premium to precious metals.

Precious metals have been the stars of this rally, with platinum and silver stealing the spotlight. Platinum has skyrocketed 15% in September, reaching a 12-year high above $1,600 per ounce, fueled by supply concerns in South Africa and robust demand for catalytic converters. Silver, up 11% this month, has climbed to $46 per ounce—its highest since 2011—driven by industrial demand for solar panels and ongoing physical market deficits. Gold, though slightly overshadowed, still shines with an 8% gain in September and a 44% increase for the year, hitting a record near $3,800 per ounce amid strong inflows into bullion-backed ETFs.

The rally isn’t limited to precious metals. Base metals, particularly copper, are catching up, with prices surging above $10,000 per tonne—the highest in over a year—following production setbacks, including a force majeure declaration at a major Indonesian project. Analysts predict copper prices could climb another 20% to $12,000 per tonne within the next 6 to 12 months. Aluminium is also gaining traction, with forecasts suggesting a 50% price surge by 2027, driven by its critical role in AI, data centers, and robotics.

Even oil has joined the rally, with Brent crude jumping 5.2% last week to above $70 per barrel, spurred by geopolitical tensions affecting export outlooks. However, concerns about potential oversupply from increased production by major oil-producing nations could temper this rise, with forecasts suggesting Brent may drop to $60 per barrel by year-end or even lower in 2026.

As the Federal Reserve’s policies continue to shape market dynamics, the commodity sector remains a hotbed of opportunity, with precious and base metals leading the charge into a potentially transformative 2026.