Trump’s first week in office has made for choppy times across commodity markets, with executive orders and announcements coming fix and fast out of the Trump administration effecting energy, precious metals, and agricultural commodities alike. In these early days as the market adjusts to these new policy announcements, perhaps the hardest part is quantifying the immediate impact against the backdrop of existing market dynamics. In this article, we’ll take a whistlestop tour around the latest developments to have unfolded in the last week.
Trump’s first week in office: Impact on energy markets
First, the obvious, let’s focus on energy markets, where orders from Trump’s first week in office targeted LNG export restrictions. The revival of LNG gas exports has sent ripples through global energy markets and traders are already positioning themselves for increased US LNG exports. Then there is the challenge of U.S. sanctions which has led to a significant reduction in Russian oil offers, directly impacting supply dynamics in the market and causing a scramble for oil supply leading to concerns about the end of cheap oil and rising prices.
Adding to market volatility, Trump’s direct call on OPEC to lower oil prices has already impacted market sentiment, triggering a notable drop in WTI prices. This intervention, characteristic of Trump’s hands-on approach to oil markets, has created additional uncertainty around crude oil price trajectories and OPEC’s potential response.
With European energy markets facing particular exposure, as well as these recent developments from Trump’s first week in office, Europe also continues to grapple with seasonal demand fluctuations and the ongoing need to rebuild storage levels. All eyes will be particularly focused on how this slew of policy changes and pressures might affect the already delicate balance between Russian pipeline gas, Europe’s storage woes, U.S. LNG imports, and Europe’s ambitious renewable energy targets.
Impact on metals
Gold has been clearly responsive to Trump’s first week in office, increasing significantly this week amid policy uncertainty. Needless to say, this reflects the traditional safe-haven status of precious metals during periods of geopolitical turbulence. The present outlook for gold remains bullish as markets digest the implications of Trump’s trade stance.
But the game changer will be the impact on industrial metals. The Nifty Metal index’s 2% decline following Trump’s tariff threats on Chinese imports demonstrates immediate market sensitivity across silver. The truth is more complicated when examining copper prices, as Trump’s executive order on mining activities in the Boundary Waters region suggests potential supply increases.
Impact on agricultural commodities
For the avoidance of any doubt, agricultural commodities haven’t escaped the policy whirlwind. The question here is how Trump’s immigration policies will affect farm labour availability. As a result, we can be reasonably confident that wheat markets will face increased volatility as farmers grapple with potential workforce challenges going forward.
Meanwhile, soybean prices showed sensitivity following Trump’s reiteration of tariff threats against China, impacting market sentiment. To add to this, the appointment of a USDA secretary who opposes ethanol and farm subsidies raised concerns about potential reductions in demand for soybeans, particularly as soybeans are a key ingredient in biofuel production.
Looking ahead
If experience tells us anything, we can be reasonably confident that these market movements in response to Trump’s first week in office are not purely speculative. In fact, everywhere you look across the commodity markets, there’s evidence of fundamental shifts in supply and demand expectations. To reclaim stability, markets will need time to adjust to the new policy landscape, assessing the lay of the land once the dust settles.
With several areas of policy uncertainty clouding market outlooks, what is needed is clarity on long-term trade policy directions. And then, there’s the interplay between different commodity sectors deserves attention, as policy changes in one area often create ripple effects across others. We’ll all be looking out to see how the potential impact on global trade flows if Trump’s first month maintains this pace of policy shifts. If narratives shape politics, then commodity markets are already pricing in expectations of significant change. It’s no new news that we live in an age of highly volatile geopolitics, and Trump’s first week in office has amplified this reality across commodity markets.
As for the longer-term implications, commodity traders will be closely monitoring how these initial policy moves might evolve into broader structural changes in global commodity trades. This is not to say that all impacts will be negative – some sectors may benefit from reduced regulation and new trade arrangements. But there is no doubting there will be a significant adjustment period ahead for global commodity markets.
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