Commodities in 2026: Gold, copper, oil and the role of commodities in inflation

Commodity markets have started 2026 with significant volatility. Gold, copper, and oil have all experienced major price swings as inflation pressures, geopolitical conflict, and supply disruptions influence global markets. Understanding how commodities behave during inflationary periods and how portfolios are positioned can help investors navigate these environments.

Where do we even start? The first months of 2026 have seen remarkable volatility across commodity markets. The year started with gold and copper continuing the momentum from 2025, both reaching new all-time highs. Copper surpassed $6.50 per pound, while gold surged to $5,589 per ounce. Oil also made headlines in March, not by reaching a new high, but by recording the largest five-day increase on record. After surging more than 35% and briefly topping $120 per barrel, oil prices quickly reversed, falling back below $80 in less than two days only to bounce higher in the days following.

To put this recent commodity volatility in perspective, over the past 14 months, the asset class, as measured by the Bloomberg Commodity Index, has returned more than 18% — outpacing the beloved S&P 500^® Index. However, zooming out tells a different story. In the 16 years leading up to 2025, commodities produced a negative cumulative return, illustrating their volatile nature.

One of the primary drivers behind commodity price movements is inflation. Historically, periods of rising inflation often coincide with stronger commodity prices, as many raw materials serve as inputs across the global economy.

Inflation

Although inflation has remained relatively range-bound over the past couple of years, it continues to dominate investment discussions. Only two months into 2026, and a new inflationary pressure has emerged: war.

Historically, wars tend to put upward pressure on inflation in two main ways:

• Increased government spending
• Supply chain disruptions

Supply chain disruptions often depend on the countries involved, but they can extend well beyond them. In today’s fast-changing situation, global markets are focused on oil as the conflict involving Iran emerges.

The Strait of Hormuz is one of the most important energy shipping routes in the world. More than 20% of global oil and natural gas supplies move through this narrow passage connecting the Persian Gulf to international markets. Any disruption to traffic through the Strait can have immediate impacts on global oil prices.

How Frontier responds

Periods of market volatility—especially those driven by daily headlines about oil and other commodities—naturally lead clients to ask how their portfolios are positioned.

Frontier Strategies are designed with risk management and dynamic asset allocation at their core. As a result, the Strategies the portfolios already maintain diversified exposure to commodity-related assets that can react positively to environments like the one we are experiencing today.

Frontier Strategies, ranging from Conservative to Global Opportunities, include exposure to both domestic and foreign commodity-related industries. Examples include:

• Oil and natural gas producers
• Precious metals mining companies
• Agricultural companies
• Physical gold through the use of First Eagle Funds.

The table below illustrates the most recent holdings for commodity-related allocations across selected Frontier Strategies.

A time built for active management

Although Frontier Strategies do not make explicit tactical allocations to commodities, the table above highlights one of the advantages of working with independent, third-party active managers.

Long-term asset allocators like Frontier typically avoid short-term tactical positioning. Active fund managers, however, can respond more dynamically to market disruptions.

Periods of market volatility and geopolitical uncertainty often lead to pricing dislocations widening the performance differences between companies. As markets react to news, sentiment, and policy shifts, active managers can capitalize on these distortions by making selective adjustments — whether that means modifying portfolio duration or increasing exposure to assets like commodities that can act as inflation hedges.

In other words, active managers are built for environments like this.

Frontier will continue focusing on long-term themes and downside risk management, while our FundFusion process seeks to optimize a blend of active and passive manager assignments designed to help portfolios weather the storm.

And when it comes to commodities, it’s worth remembering: A little goes a long way.

Key takeaways

• Commodity markets have experienced significant volatility in early 2026.
• Gold and copper have reached new all-time highs, while oil prices have experienced large swings due to geopolitical tensions.
• Inflation and supply chain disruptions often push commodity prices higher.
• The Strait of Hormuz remains a critical global energy chokepoint with more than 20% of global oil and gas flows passing through it.
• Frontier Strategies maintain diversified exposure to commodity-related sectors, including energy, materials, and precious metals.
• Active management can help identify opportunities during periods of market disruption and inflation.