Precious metals, energy sectors are seen gaining at least 10 percent by 2025.

Investing.com – Macroeconomic challenges facing commodities in the first three quarters of 2024 have reversed and become a tailwind heading into the new year, analysts said. Wells Fargo (NYSE:

Higher interest rates and broader economic uncertainty weighed on commodity prices between January and September last year, although that trend reversed in the fourth quarter, analysts led by Mason Mendez said in a note to clients published Monday.

Commodities generally underperformed in 2024, he said with Bloomberg Product. Total (EPA: ) index of returns, seeing a 4.5% year-over-year increase as of Dec. 26.

“While supply conditions remained supportive of higher prices, demand for commodities was dampened by global economic headwinds,” the analysts wrote.

In the year He said that by 2025, demand will improve rapidly and it will be seen as a flashpoint for a significant increase in commodity prices. But the supply chain “must not be forgotten,” he noted.

“After two years of low commodity prices, many producers have disappointed production growth,” the analysts said. “If demand recovers faster than expected, this could be a critical point in 2025.”

He noted that new product launches often reduce demand by “months, sometimes years.”

Among individual sectors, analysts say they are most excited about precious metals and energy, both of which are expected to gain at least 10% by 2025. 270 target range for the broader Bloomberg Product Total Return Index.

Gold, in particular, has experienced turbulence towards the end of 2024 as caution on further Federal Reserve interest rate cuts, which has curbed bullish appeals, contributed significantly to nominal and real bond yields.

Still, the yellow metal rallied nearly 27% to close the year at $2,625 a troy ounce, and the prospect of further Fed rate cuts — albeit at a slower pace — could continue to strengthen its appeal, Wells Fargo analysts said.

They have set a target range of $2,700-$2,800 per troy ounce for gold this year.

Energy, on the other hand, will benefit more from demand as the global economic situation improves, analysts predict. $85-95 per barrel, crude $90-100 per barrel. In the year Oil prices are down around 3% in 2024, partly due to a sluggish global demand recovery after the pandemic.