CIO Insights: Unearthing opportunities in commodities

10 minute read

Commodities have had a strong start to 2026. Much of that has been driven by precious metals like gold and silver, but there's more to the story if you dig a little deeper. Industrial metals have also been gaining momentum after a period of underperformance, as tightening supply meets a wall of growing demand.

In this month’s CIO Insights, we explore where these structural forces could create opportunity in the commodities complex – and what that implies for the road ahead.

Key takeaways

• The rally in commodities extends beyond precious metals. Gold and silver have dominated the headlines, but industrial metals like copper have been moving higher as well. That reflects a number of forces: supply has tightened after years of underinvestment, while demand is being driven by electrification, infrastructure investment, and the broader energy transition – with AI adding an incremental push. At its core, the dynamic is straightforward: supply in a few key commodities is set to adjust slowly as demand builds over a multi-year horizon.
• Copper and uranium stand out because they sit at the intersection of rising demand and constrained supply. Copper is foundational to power and grid infrastructure, which both AI and the broader energy transition depend on. Uranium, meanwhile, is becoming increasingly relevant as countries look for reliable, low-carbon power sources. Both face supply constraints that will take years to resolve. That said, prices will still be shaped by cyclical forces in the near term – from China’s growth trajectory and inventory swings to policy shifts and trade distortions.
• Supply constraints in these markets are structural, not just cyclical. The underlying supply-demand imbalances in copper and uranium are measured in years, not months – driven by lengthy mine development timelines and a long period of underinvestment. For long-term investors, periods of price weakness driven by nearer-term, cyclical factors may present opportunities to build exposure to markets where tightness looks set to deepen over time.

(See our Glossary at the end for a breakdown of the terms used in this article.)

The commodities rally is not limited to precious metals 

Commodities have been one of the standout asset classes in 2026. The Bloomberg Commodity Index, which tracks a diversified basket of energy, metals, and agricultural products, has risen as much as 17% over the past 12 months or so¹. While precious metals – particularly gold and silver – have driven a meaningful share of those gains, or more than 110% at its peak, they haven’t been the only drivers.

Industrial metals like copper, aluminum, and zinc have also moved higher, with gains of as much as 25% during this period – as illustrated by the light blue line in Chart 1 below. Part of this reflects investor positioning and enthusiasm around structural themes like AI, as well as trade-related distortions.

These moves are not purely sentiment-driven, however. In several of these markets, demand has remained resilient while supply growth is constrained by long project timelines and years of underinvestment. In other words, this is as much a supply-demand story as it is a narrative-driven one.

Demand for industrial metals is being driven by both cyclical and structural forces

As we shared in our 2026 Macro Outlook: Just the FACTs, the economy is set to run hot amid strong fiscal spending across many major economies. That backdrop is creating cyclical tailwinds for commodities – from public infrastructure spending to defense outlays and a gradual improvement in parts of the global industrial cycle.

While these forces help explain part of the recent pickup in metals prices, longer-term structural drivers are also reshaping demand across the industrial metals complex:

• Electrification: Electricity demand is projected to grow more than 3.5% per year through 2030², as transport, heating, and parts of industry shift from fossil fuels to electricity. Electrified systems are significantly more metals-intensive: EVs require much more copper and aluminum than conventional vehicles, while batteries depend on nickel and lithium. Grid expansion – which will require trillions of dollars in global investment in the coming decades – add further demand for copper, aluminum, steel, and other alloys.
• Energy transition and infrastructure buildout: Over 90% of net new power capacity added in 2024 came from renewables rather than traditional fossil fuels³. Wind, solar, storage, and transmission upgrades include large volumes of base metals, while battery storage systems are adding incremental demand for battery metals. In general,  clean energy systems require more metals upfront to build generation, storage, and grid infrastructure than traditional fossil fuel systems.
• Infrastructure and industrialisation: Beyond the energy transition, fiscal programs across the globe are driving a broader wave of infrastructure renewal and reindustrialisation. Governments are upgrading transport and power systems, reinforcing defense capacity, and attempting to reshore critical manufacturing supply chains. Such projects are structurally supportive of metals demand, given their reliance on steel, copper, aluminum, and specialty materials.
• AI: The demands of AI adds to these pressures. Data centre construction requires steel, aluminum, and copper, while rising power demand from AI workloads amplifies the need for grid upgrades and generation capacity. While AI remains a relatively small share of incremental metals demand today compared to the broader energy transition, its importance lies in its trajectory: it compounds structural demand in markets that were already tightening.

Supply, meanwhile, is still constrained

Stronger demand is only one side of the equation; the other is supply. Across much of the industrial metals complex, investment slowed meaningfully after the commodity downturn in the 2010s. Lower prices alongside shareholder demands for stronger balance sheets and higher returns led miners to prioritise cash flow and capital returns over aggressive expansion – thinning the pipeline of future supply.

Even under favourable conditions, new mining capacity is slow to develop. Large projects typically take 7-10 years to move from discovery to production, or even longer. That lag means supply can’t respond as quickly amid a strengthening in demand. In several markets, tighter balances today reflect not just cyclical and structural demand, but the cumulative impact of years of underinvestment.

Copper and uranium – where rising demand hits constrained supply

Not every commodity is equally exposed to the forces discussed above. Looking across the industrial complex, we see the clearest intersection of structural demand growth and slow-moving supply in two key markets: copper, which sits at the heart of electrification and grid expansion, and uranium, which is increasingly relevant as nuclear power re-enters the global energy mix.

Copper: long-term fundamentals remain strong, but near-term caution is warranted

Copper has long been viewed as a bellwether for global growth – hence the nickname “Dr. Copper.” Its demand spans construction, manufacturing, power infrastructure, transport, and technology. That breadth is precisely why the metal sits at the centre of today’s investment cycle.

Electrification, for example, is raising copper intensity across the economy. EVs use roughly 2-3x more copper than conventional cars. while energy-transition demand for the metal is projected to nearly double by 2040 – setting a higher baseline for demand even before AI-related investment.

As for AI, Chart 2 shows it remains a smaller share of incremental copper demand, amounting to roughly ~1 million tonnes by 2030, or about 14% of incremental growth over that period. By comparison, electrification and grid buildout account for the bulk of demand expansion. The point isn’t that AI dominates the story, it’s that it adds incremental pressure to a market where supply growth is slow and capital-intensive.

The key constraint is supply. Copper production can’t respond quickly to this rising demand: large copper projects take roughly 17 years on average from discovery to first production. Discovery rates have declined, ore grades are falling, and years of underinvestment after the 2010s commodity downturn thinned the project pipeline.

As a result, S&P Global projects annual supply gaps of 200,000-500,000 tonnes emerging later this decade and widening significantly – potentially reaching cumulative shortfalls of up to 10 million tonnes by 2040, as illustrated below in Chart 3.

Timing, however, is the tricky part. In the near term, the global market may be looser than prices may suggest. Chinese demand remains soft as its property market continues to struggle, while tariff uncertainty is encouraging US buyers to front-load imports of the metal. That has pulled copper into US warehouses and tightened availability elsewhere, amplifying prices. Goldman Sachs argues that prices could retrace once tariff risks are clarified and this stockpiling subsides, even if longer-term supply constraints reassert themselves later in the decade⁴.

Bottom line: Rising electricity demand from EVs, grid expansion, and the broader energy transition sets a structural floor for copper demand. Supply constraints shape the long-term balance, while AI can act as a swing factor. Near-term price action, however, will still be driven by China, inventories, and policy-related distortions.

Uranium: supply deficit is already here, and the demand pipeline is growing 

If copper connects the grid, uranium helps power it. As electricity demand rises, the question shifts from transmission to generation. After years of stagnation following the Fukushima Daiichi nuclear accident, the build-out of global reactor capacity is accelerating to meet this demand – with 15 reactors expected to come online in 2026 and more than 50 additional units planned through 2030⁵.

Chart 4 below shows net capacity is projected to rise by nearly 40 gigawatts (GW) over the next 5 years – nearly three times the capacity that came online during the decade prior.

Looking further out, the International Atomic Energy Agency projects global nuclear capacity could more than double by 2050⁶ as countries around the world increasingly prioritise reliable, low-carbon baseload power:

• China remains the anchor of new nuclear construction; of the 62 reactors currently under construction globally, 28 are in China. In recent years, China has been approving 10 new reactors annually, a build pace unmatched by any other country⁷. 
• In the US, nuclear policy has turned decisively supportive, with the administration fast-tracking new reactor projects and backing efforts to rebuild domestic nuclear fuel production.
• Elsewhere, France has committed to building six new reactors, while Japan has restarted its largest nuclear plant and is gradually increasing nuclear’s share of its power mix after a multi-year pullback.

This policy support is being driven in part by a structural rise in power demand. In the US alone, data-centre electricity load is expected to more than double by the mid-2030s, becoming one of the largest sources of incremental demand growth⁸.

Corporate buyers are already moving to secure firm capacity: Meta recently signed agreements supporting 6.6 GW of nuclear power, roughly the equivalent of six large reactors. What’s more, small modular reactors (SMRs) are being advanced as a more flexible, potentially faster deployment model for data centres and industrial clusters. These remain early-stage technologies, however, with commercial-scale output still years away.

All of this points to a growing pipeline of reactor demand. As with copper, the constraint is on the supply side. According to the World Nuclear Association, global uranium mine production in recent years has supplied roughly 90% of reactor fuel requirements, with the remainder met by secondary sources such as stockpiles and recycling⁹.

Supply response is slow and concentrated. New uranium projects often take 10-15 years to develop, and production is heavily dominated by a small group of countries, with Kazakhstan alone accounting for roughly 40% of global output. While some idled capacity may be restarted, sustained growth requires new mines that are still years away. Chart 5 below shows just how far projected demand is running ahead of supply.

Bottom line: Uranium’s primary deficit is already visible. Policy support, energy security concerns, and AI-driven power demand reinforce the structural case, though long development timelines mean volatility remains part of the story.

For commodities, look past short-term swings and focus on long-term constraints

In copper and uranium, the deeper story isn’t what happens over the next month – it’s what happens over the next decade. New mines take many years to build, permitting is slow, and both markets are still recovering from a long stretch of underinvestment. That means supply can’t quickly respond if demand keeps rising.

Prices, however, will still move with the headlines. Copper will react to China’s growth path, US tariff news, and inventory swings. Uranium’s trajectory will depend on if long-term agreements slow or if new mine supply ramps up faster than expected. These forces can push prices up or down in the short term – even if the longer-term supply picture remains tight.

For investors, perspective is key. Short-term volatility doesn’t necessarily invalidate the structural case. In fact, periods of weakness driven by macro noise or policy uncertainty can create opportunities to build exposure gradually to markets where supply looks constrained and demand continues to build.

Rock-solid allocations: How metals fit into a diversified portfolio

There isn’t a single “right” way to invest in these themes. Broad commodity or basic material equity ETFs can reduce volatility through diversification across commodities and companies, though they remain exposed to shifts in the overall commodity cycle and macro environment. More targeted positions in individual commodity or thematic vehicles – such as copper miner equities or uranium-focused ETFs – can potentially offer greater upside if the thesis plays out, but also come with higher volatility.

What matters most is how these exposures fit within an overall portfolio. Commodities and resource equities tend to move in cycles, and their role in a portfolio – whether as inflation hedges, growth enablers, or part of structural transitions – can differ depending on the economic regime. A measured allocation, clear expectations, and a long-term perspective remain more important than concentrating on any single theme.

Authors

Stephanie Leung, Chief Investment Officer

Stephanie and her team oversee the full spectrum of investment products and portfolios offered at StashAway. She brings more than two decades of investment expertise across multiple asset classes. Prior to joining StashAway in 2020, she managed investment portfolios at institutions such as Goldman Sachs and multi-billion dollar family offices in the region.

Justin Jimenez, Head of Macro and Investment Research

Justin has more than a decade of experience in economic and investment research, and contributes to shaping the investment office's views on the global economy and asset classes. Prior to joining StashAway in 2022, he was an economist at Bloomberg.

Glossary

Industrial metals

Metals used primarily in construction, manufacturing, and infrastructure. Copper, aluminum, zinc, and nickel are common examples. Their prices tend to rise and fall with economic activity.

Precious metals

Metals valued for their rarity and widely used as stores of value. Gold and silver are the most commonly traded. They may also have applications in jewelry, electronics, and other industries.

Supply gap

When demand for a good or resource exceeds the amount that producers are able to supply.

Cyclical demand

Demand that rises and falls with economic activity.  Cyclical demand is driven by shorter-term conditions, such as business cycles or shifts in industrial activity.

Structural demand

Demand driven by long-term forces that tend to persist regardless of the economic cycle.

Grid expansion

The buildout and upgrading of the networks that transmit and distribute electricity from power plants to homes, businesses, and industry.

References

1. Bloomberg. (2025). Bloomberg Commodity Index 2026 Target Weights Announced. Retrieved from: https://www.bloomberg.com/company/press/bloomberg-commodity-index-2026-target-weights-announced
2. International Energy Agency. (2026). Global electricity demand is set to grow strongly to 2030, underscoring need for investments in grids and flexibility. Retrieved from: https://www.iea.org/news/global-electricity-demand-is-set-to-grow-strongly-to-2030-underscoring-need-for-investments-in-grids-and-flexibility
3. Li, S., Jaeger, J., Singh, N., and Layke, J. (2025). The State of Clean Energy, in 10 Charts. World Resources Institute. Retrieved from: https://www.wri.org/insights/state-clean-energy-charted
4. Goldman Sachs Research. (2026). Why Record-High Copper Prices Aren't Forecast to Last. Goldman Sachs. Retrieved from: https://www.goldmansachs.com/insights/articles/why-record-high-copper-prices-arent-forecast-to-last
5. Wade, W. (2025). Nuclear Industry to Add 15 Reactors Next Year After 2025 Decline. Bloomberg. Retrieved from: https://www.bloomberg.com/news/articles/2025-12-15/nuclear-industry-to-add-15-reactors-next-year-after-2025-decline
6. International Atomic Energy Agency. (2025). IAEA Raises Nuclear Power Projections for Fifth Consecutive Year. Retrieved from: https://www.iaea.org/newscenter/pressreleases/iaea-raises-nuclear-power-projections-for-fifth-consecutive-year
7. Howe, C. (2025). China approves building of 10 new nuclear power units for $27 billion. Reuters. Retrieved from: https://www.reuters.com/sustainability/boards-policy-regulation/china-approves-building-10-new-nuclear-power-units-27-billion-2025-04-28
8. Kou, H. and Limandibhratha, N. (2025). Power for AI: Easier Said Than Built. BloombergNEF. Retrieved from: https://about.bnef.com/insights/commodities/power-for-ai-easier-said-than-built
9. World Nuclear Association. (2024). Uranium Markets. Retrieved from: https://world-nuclear.org/information-library/nuclear-fuel-cycle/uranium-resources/uranium-markets