Commodity Tracker: Gold Sparkles as Crude Lags - Motilal Oswal Highlights Divergence in Asset Trends By Investment Guru India | 20 May 2025
Amid continued macroeconomic uncertainty and geopolitical risk, the global commodities market is showing signs of divergence, with precious metals outperforming energy, and base metals stabilizing after initial volatility. According to the Motilal Oswal Morning India report dated 20 May 2025, gold continues to lead all asset classes in 2025, while crude oil remains under pressure from demand concerns and inventory oversupply.
Precious Metals: Gold Remains the Safe Haven
As of 20 May 2025, gold prices were up 1.1% on the day, reaching $3,240 per ounce, translating to a year-to-date gain of 23.5%. This performance significantly outpaces that of equity benchmarks and other commodity indices.
Motilal Oswal attributes the continued rally in gold to:
Persistent global macro uncertainty
Flight to safety amid currency volatility
Hedging demand from central banks and large investors
The brokerage report noted that gold has benefitted from stable bond yields, subdued real interest rates, and elevated geopolitical tensions across the Middle East and Europe.
Crude Oil: Bearish Bias Persists
In contrast, Brent crude oil remained flat at $65 per barrel, reflecting sustained weakness in global demand. On a year-to-date basis, Brent has declined by 12.2%, making it one of the worst-performing commodities in 2025 so far.
Key headwinds highlighted by Motilal Oswal include:
High global inventory levels
Slower-than-expected recovery in Chinese industrial demand
Mixed signals from OPEC+ regarding further production cuts
The report pointed out that recent API inventory data and U.S. crude stock levels are keeping traders cautious, while refined product demand remains below seasonal averages.
Base Metals: Copper Rebounds, Aluminium Lags
Copper prices rose by 0.5% on the day, reaching $9,524 per metric tonne, and are up 10.1% for the year. Copper demand is seeing recovery, particularly from the electric vehicle (EV) and renewable energy sectors, even as Chinese manufacturing data remains mixed.
Aluminium, however, saw a daily decline of 1.5% and is down 3.0% YTD. Motilal Oswal notes that aluminium is under pressure due to supply glut in Asia and subdued construction activity in key economies.
“Base metals continue to witness selective investor interest, with copper leading on long-term electrification trends, while others like aluminium remain constrained by short-term oversupply,” the report states.
Currency Movements & Commodity Linkage
On the currency front:
USD/INR closed at 85.4, slightly down by 0.1%
USD/JPY moved down to 144.8
USD/EUR appreciated to 1.10, up 0.9%
A stronger euro and stable dollar are supporting gold prices globally, while crude remains range-bound due to weaker petro-currency performance.
Motilal Oswal notes that exchange rate stability in India is helping limit imported inflation, which otherwise tends to impact fuel and metal-linked sectors.
Broader Implications
The report highlights that the divergence in commodity performance could continue, especially if bond yields remain stable and central banks adopt a cautious approach to rate cuts. Sectors linked to gold and copper are expected to remain relatively strong in the near term, while those linked to oil and aluminium may continue to face pricing headwinds.
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