Commodities Poised for a Major Bull Run, Analysts Predict a 2026 Surge
Commodity prices are currently undervalued and poised for a significant rally, potentially becoming a defining macroeconomic trend in 2026, according to recent analysis. A confluence of factors – including underinvestment in supply, a cyclical demand upturn, supportive monetary policies, and historically low investor allocations – are converging to create a compelling case for a new cyclical bull market in commodities following a bear market from 2022-2024.
Valuation Signals a Buying Opportunity
Currently, commodities as an asset class are considered “cheap,” presenting a potentially lucrative entry point for investors. One analyst noted that paying close attention to improving technicals when an asset is undervalued is a key investment principle. This assessment specifically applies to the diversified GSCI (light energy) index, which provides a broad measure of commodity performance.
Supply Constraints Fueling the Potential Surge
A critical driver of this anticipated bull market is the significant underinvestment in commodity supply. Following substantial investment during the 2000s commodity supercycle, a natural slowdown in capital expenditure (capex) has occurred. However, this pullback has now laid the groundwork for a future supercycle, as supply struggles to keep pace with growing demand.
Demand Reacceleration and Macroeconomic Tailwinds
The expected global growth reacceleration into 2026 is expected to further bolster demand for commodities. The annual rate of change in commodity prices historically tracks closely with the global manufacturing PMI, suggesting a strong correlation between economic expansion and commodity price increases. Adding to this positive outlook are substantial monetary tailwinds. Historically, periods of easing monetary policy have ignited rallies in commodity markets.
Investor Sentiment Remains Lukewarm
Despite the positive fundamentals, investor sentiment towards commodities remains surprisingly neutral. Allocations to commodities are historically low, with much of the recent uptick driven by precious metals. Allocations to commodities excluding gold are near record lows, indicating significant room for growth as sentiment shifts. “
Technicals Confirm Emerging Bull Market
Technical analysis further supports the bullish outlook. Analysts point to a new cyclical bull market already underway, albeit in its early stages. Gold has been identified as a leading indicator, paving the way for a broader “catch-up” rally across the commodity complex. Similarly, an equal-weighted basket of global commodity stocks is signaling a new cyclical bull market in commodity prices.
Early Stages of a Broad-Based Rally
While certain commodities have already experienced substantial gains, the current rally remains somewhat narrow. Average pair-wise correlations across commodities are still relatively low, suggesting that the “crowd” – widespread investor participation – has yet to fully arrive. This is in contrast to the mid-to-later stages of the 2000s commodity bull market, and more recently in 2022, when nearly all commodities moved in unison. “
As investors reflect on 2025 and look ahead to 2026, a deeper understanding of this often-overlooked asset class is highly recommended. The confluence of factors suggests a significant opportunity for investment in both commodity prices and related stocks, while also acknowledging the potential for increased inflationary pressures. “
