February 2026 Commodities Update

Westpac’s February 2026 Commodities Update reveals a strong start to the new year, with a noticeable uptick in the broad commodities index, which has surged by almost 11% since December. Leading this charge is gold, with other metals and energy sectors also experiencing gains. Gold, copper, nickel, and oil have seen significant forecast upgrades, pushing the index to a 16% increase compared to the previous outlook.

Looking ahead, gold remains a standout performer due to robust demand supported by central bank purchases and investor interest. The macroeconomic backdrop further strengthens gold’s position with geopolitical tensions and shifting asset allocations favoring the precious metal. Central bank purchases are expected to continue amid geopolitical risks and diversification concerns, while investor interest remains steady across institutional and retail channels. Physical demand, especially from China ahead of the Lunar New Year, has been stronger than anticipated.

Conversely, iron ore faces challenges as weak seasonal demand and supply risks weigh on prices. Chinese port inventories are a significant factor affecting iron ore prices negatively. Though the price decline is notable, the overall commodities outlook remains optimistic, with most metals and energy sectors showing resilience in the face of these challenges. Gold’s record highs are expected to continue in 2026, supported by a combination of factors including geopolitical tensions and asset reallocations favoring the metal.

Crude oil prices continue to be range-bound, with geopolitical risks providing some support while supply dynamics cap upside potential. Reports of US military deployments and ongoing tensions in the Middle East have driven price movements. On the supply side, OPEC+ production declines have been offset by increased US crude output and a recovery in Venezuelan production. Mixed demand signals and rising non-OPEC supply contribute to the cautious outlook for crude oil prices.

The LNG market is marked by strong growth in global supply, primarily driven by massive investments in US LNG. This influx of supply is expected to outpace demand growth, potentially leading to lower seaborne LNG prices. The growth in LNG exports and increased energy demand from data centers in the US will drive local gas demand higher. This trend could see US gas prices rise significantly in the next decade, impacting both consumers and producers in the LNG market. Despite the potential profit pressures on LNG sellers, the industry’s resilience and flexibility are expected to shine through.

In conclusion, Westpac’s latest Commodities Update paints a positive picture for most sectors, with gold leading the charge and iron ore facing headwinds. Geopolitical tensions, supply dynamics, and demand trends continue to shape commodity markets in 2026, with each sector facing unique challenges and opportunities in the months ahead.