Analysts talk about the beginning of the commodity "supercycle". Is everything so unambiguous?

Commodity markets may be entering the phase of a new "supercycle" amid rising demand for metals, energy and other tangible assets, according to John Velis, Americas strategist at BNY, writes MarketWatch.

The current market environment is reminiscent of the commodities "supercycle" of the early 2000s and reflects an accelerating boom in capital spending related to AI and technology, said John Velis, macroeconomic strategist for the Americas at BNY. "Tangible assets have started the year on a rapid upward trajectory, with last year's precious metals rally now extending to industrial metals," Velis noted. This momentum could eventually carry over to the energy sector if global growth sentiment continues to improve in 2026, he said.

At this point, the analyst added, "the relative valuation of financial assets, primarily equities, compared to tangible assets (excluding precious metals) indicates attractive price levels to enter this [commodity] investment trend with the expected increase in demand from industrial applications."

Jordan Rizzuto, chief investment officer at GammaRoad Capital Partners, agrees: "We may be at a tipping point now - where equities and 'hard' assets, including commodities, are shifting in terms of relative strength," he observed, emphasizing that "we have already experienced one of the most significant jumps in financial assets relative to tangible assets." Now, he added, precious metals are in the spotlight, and "tectonic" shifts in markets are still possible.

"We've seen oil, gold and silver prices rise amid heightened geopolitical tensions, especially after the [U.S.] military operation in Venezuela," Apollon Wealth Management chief investment officer Eric Sterner also noted.

Since the beginning of the year, quotes of the S&P 500 Materials index rose by 6.4%, while the S&P 500 sector index, following the value of securities of companies from the energy sector (S&P 500 Energy Sector Index), increased by 4.3%, writes MarketWatch. Gold and silver at trading on January 12 reached another historic highs (last year they added 64% and 141% respectively). Brent oil also shows positive dynamics: in January, quotes rose by 4.1%. The market was supported by the uncertainty associated with the recent US actions in Venezuela, which outweighed concerns about a possible global oil supply glut.

Current demand for industrial metals and natural gas is linked to the development of AI and data centers, according to Warren Pace, co-founder and strategist at 3Fourteen Research.

In addition, he said, gold and other precious metals are being supported by the so-called "dollar depreciation" trade, a strategy based on the belief that excessive government debt and budget deficits are eroding the value and purchasing power of the U.S. currency. "These factors make commodities a strong diversification tool for portfolios alongside equities," Pace said.

Also, the growing interest in tangible assets can be explained by a new wave of geopolitical uncertainty, primarily around Venezuela and the oil market, added Gary Schlossberg, global strategist at Wells Fargo Investment Institute.

According to Goldman Sachs, everything will not be so clear in the oil market in 2026, writes Reuters. Against the background of supply growth, which will lead to an excess of oil on the market, as well as geopolitical risks associated with Russia, Venezuela and Iran, the volatility of oil prices may increase. The investment bank maintained its 2026 average price forecasts for Brent and WTI at $56 and $52 per barrel, respectively. As oil inventories accumulate in OECD countries - a group of developed economies, including the U.S. and European countries - the cost of Brent and WTI will fall to $54 and $50 per barrel in the fourth quarter of 2026, according to Goldman Sachs (this is 14.3% and 14.7%, respectively, below current prices). Oil prices will only begin to recover in 2027, when the market will return to deficit as non-OPEC supply growth slows, analysts predict. In 2030-2035, the average prices of Brent and WTI, according to Goldman Sachs estimates, will be $75 and $71 per barrel.

This article was AI-translated and verified by a human editor