UBS strategist Sagar Khandelwal is telling clients to build broad exposure to commodities, citing electrification, AI infrastructure spending, persistent supply constraints and years of underinvestment as drivers of a sustained upcycle. The call lands as the Quantix Commodity Index Total Return hits a record high and fellow strategist Jeff Currie warns that scarcity in the physical world is reemerging.
A structural case for hard assets
UBS strategist Sagar Khandelwal is urging clients to build broad exposure to a commodity upcycle, one day after commodities veteran Jeff Currie told investors to get long for the next leg of the rally. Khandelwal points to electrification, surging power demand, artificial-intelligence infrastructure spending, persistent supply constraints and years of underinvestment as forces converging into a sustained upswing in hard assets.
Commodities can generate returns while protecting portfolios against energy disruptions and renewed inflation, he said. UBS recommends diversified exposure across precious metals, energy, industrial metals and agriculture, arguing an actively managed approach suits the fast-shifting leadership within commodity markets.
Gold stays constructive as rate-hike bets fade
Gold has resumed its climb as US inflation concerns have eased and markets pulled back expectations for near-term Federal Reserve rate hikes, Khandelwal said. He still expects central bank demand, continued dollar diversification and global debt concerns to keep supporting prices, and UBS remains constructive on gold over the next 12 months.
Energy and copper carry their own supply stories
The ongoing conflict between the US and Iran highlights the fluid nature of geopolitical events, and with crude supply restricted and both sides facing constraints in reaching a compromise, uncertainty over shipping and production is likely to keep energy markets sensitive, Khandelwal said. He expects energy exposure to guard against that supply uncertainty and inflation spillovers while robust demand supports a constructive medium-term outlook.
Industrial metals such as copper have benefited from electrification, the energy transition and the global buildout of AI infrastructure, he added, with supply constraints and projected market deficits reinforcing UBS's positive longer-term view.
The rally is already broadening
The Quantix Commodity Index Total Return has surged to a record high, gaining more than 22.5% since late June across 24 US-dollar-denominated futures spanning energy, agriculture, livestock, industrial metals and precious metals — a sign the rally isn't confined to one corner of the physical world.
That momentum echoes Currie's warning last week that scarcity in the physical world is reemerging. London copper is trading above $14,000 a ton. The Bloomberg Agriculture Spot Index has broken out to a three-year high, and European tungsten prices have topped $3,000 a ton.
According to Jeff Currie: "The illusion of abundance is likely behind us."
Source: Oilprice.com
Trading involves risk.
Risk Disclaimer
