Investing.com -- UBS and JP Morgan cut their commodity price forecasts, citing weaker demand following the recent tariff escalation and a deteriorating global growth outlook.

UBS said the tariffs announced on Liberation Day triggered a sharp selloff in global equities and commodities and were materially worse than expected.

The firm now sees a roughly 10% decline in 2025-26 industrial metals prices due to weaker sentiment, falling capital spending, and a reversal of pre-tariff buying.

JP Morgan also cut its metals demand forecasts and now expects global copper and aluminum balances to shift into surplus.

“The emerging and increasingly apparent loss in global demand momentum... will eventually drive further sustained falls in base metals prices,” analysts at JP Morgan said.

Both brokerages noted that Chinese stimulus could partially offset the demand shock, but flagged that expectations for support remain modest, particularly in traditional sectors like housing and construction.

UBS remains bullish on gold, calling the case for allocations “more compelling than ever” amid weaker growth, inflation, and geopolitical risks. It sees upside for gold miners as consensus earnings adjust to higher gold prices.

Nickel, zinc, and lithium are also expected to remain under pressure, though UBS believes supply discipline and cost support could limit further downside. Iron ore and coal markets, while tight early in 2025, are forecast to swing into surplus in the second half of the year.