Broaden commodity exposure | UBS Global

Diversify with broad commoditiesWe believe broad commodity exposure offers an attractive mix of diversification and growth potential. Commodities offer a valuable hedge against inflation and supply shocks, and their typically low correlation with equities and bonds makes them an effective portfolio diversifier, especially in periods of market stress. With US-Iran tensions cooling, restoring still-restricted flows in the Strait of Hormuz will take time, while lingering geopolitical uncertainty, structural demand trends such as electrification, and a looming El Niño for agriculture all support the case for maintaining exposure.GoldGold’s momentum has slowed in recent weeks, with its “safe-haven” appeal offset by stronger-than-expected US economic data, higher real yields, a firmer USD, and more hawkish market expectations for the Fed outlook. The move in prices mirrors the spike-and-consolidation pattern seen in past geopolitical crises, though gold also entered this period with elevated valuations and dovish Fed expectations as tailwinds, making it more sensitive now to macro drivers. Looking ahead, we believe central bank demand, continued diversification away from the US dollar, and global debt concerns will remain important structural supports. While the near-term backdrop looks skewed toward consolidation, positioning does not appear stretched, and we remain constructive over the next 12 months.EnergyThe June US-Iran agreement has reduced immediate concerns over a prolonged disruption in the Strait of Hormuz, but uncertainty over how quickly shipping and insurance conditions can normalize is likely to keep energy markets sensitive. Crude oil product inventories remain low in a number of economies and are likely to fall further in the near term, which could require higher prices to ration demand before stocks are rebuilt. Any renewed friction or delay in restoring flows through Hormuz could add upside risk. In our view, energy exposure can still help protect against lingering supply uncertainty and inflation spillovers, even as the immediate geopolitical backdrop continues to improve. We continue to expect prices to move higher.Industrial metalsThey have benefited from secular demand drivers such as electrification, the energy transition, and the ongoing global buildout of AI infrastructure. Prices have remained resilient despite global growth worries. The June US-Iran agreement to reopen the Strait of Hormuz could help ease some supply constraints, though other drivers like tariffs and trade policy risks may keep prices volatile in the near term. Over the longer term, demand trends remain con-structive for the asset class.Disclaimer



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