In 2026, commodities have led all asset classes with a 47.4% gain through October 9, far outpacing stocks, gold, and Bitcoin. While the Nasdaq 100 climbed 22.7% and the S&P 500 rose 15.1% this year, commodities have shown the strongest performance so far.
Both gold and Bitcoin have dropped—gold by 3% and Bitcoin by 5.6%—leaving them in negative territory. This underperformance is surprising, given that these assets are often seen as alternatives to traditional investments, offering diversification benefits.
Commodity Performance
The commodity rally stands out against gains across most major equity categories. US value stocks have returned 21.8% in 2026, while US small-cap and mid-cap stocks have gained 14.1% and 11.9%, respectively.
Developed international equities have delivered a 9.4% return. Although equities have continued to generate positive returns, commodities have delivered more than twice the gain of the Nasdaq 100 and over three times the S&P 500’s return.
Supply Shocks and Inflation
Commodity prices can rise due to supply shortages, political conflicts, or shifting industrial needs. Different sectors, energy, metals, and agricultural goods, react to varying market forces.
A broad commodity index can rise even when individual segments of the market experience divergent trends. Supply disruptions can amplify price movements because the production of certain commodities cannot be increased quickly when demand rises or supply is interrupted.
Political conflicts, trade barriers, and supply chain delays can all affect commodity costs. The rally also has inflation implications, as rising energy, metal, and agricultural prices may push up business expenses.
Investor Preferences
Investors must distinguish between owning commodities directly, tracking them via futures, or buying shares in companies that produce them, each approach yields different outcomes.
Gold’s performance presents a striking contrast with its previous year’s gains, returning 63.7% in 2025 but declining 3% in 2026 so far. Its reversal illustrates how performance can change sharply even for an asset widely held as a store of value and a portfolio diversifier.
Bitcoin’s 5.6% decline in 2026 reflects its sensitivity to market liquidity, investor confidence, institutional activity, and crypto-specific trends.
The divergence between commodities, gold, and Bitcoin is a reminder that an asset’s reputation as an inflation hedge does not guarantee that it will rise whenever inflation risks increase.
Long-term returns tell a different story, with commodities delivering a cumulative return of 41% since 2011, equivalent to an annualised return of 2.2%. By comparison, the Nasdaq 100 has returned 1,479% cumulatively, with an annualised return of 19.1%, while the S&P 500 has gained 716%, or 14.3% annualised.
For investors, the shift in market leadership highlights the importance of diversification rather than chasing whichever asset has delivered the strongest recent returns. Commodities can help diversify a portfolio and may offer protection against certain supply-driven inflation shocks. Investors should focus on creating a balanced portfolio that includes a mix of asset classes to mitigate risks and maximise returns.