Commodities’ Relentless Rally: Why the Surge Is More Than Just a January Blip

Commodities have a reputation for being the market’s problem child, volatile, unpredictable, and often ignored by equity-obsessed traders until something breaks. But as 2026 kicks off, the asset class is putting on a show that even the most jaded macro desks can’t ignore. January delivered a jaw-dropping +10.49% gain for broad commodities, while global stocks managed a respectable +5.44%. The real story isn’t just the outperformance. It’s what’s driving it, and why this surge could be the opening act to a much bigger macro drama.

Let’s start with the facts. The Seeking Alpha “World Markets Watchlist” reads like a roll call of asset classes in full risk-on mode. Commodities are leading the charge, with energy, metals, and even softs catching a bid. The dollar index (DX-Y.NYB) is stuck at $96.87, providing no headwind. Equities are rallying, but it’s the commodities complex that’s stealing the spotlight. If you’re not paying attention, you should be.

The catalyst? It’s not just China, though the world’s second-largest economy is always lurking in the background. The real fuel is a perfect storm of supply constraints, geopolitical risk, and a market that spent most of 2025 underweight everything that wasn’t tech. The unwind is happening fast. Hedge funds are scrambling to cover shorts, and CTAs are chasing momentum higher. The result is a melt-up that feels both exhilarating and dangerous.

But is this just a January effect, or the start of a secular bull market? The context matters. The last time commodities outperformed this dramatically was in the aftermath of the COVID-19 pandemic, when supply chains were in tatters and central banks were flooding the system with liquidity. Today’s backdrop is different. Inflation is sticky, but central banks are less willing to ride to the rescue. China is making noise about dumping Treasuries, which could destabilize global funding markets and send capital flooding into real assets. And the specter of geopolitical risk, from the South China Sea to the Middle East, is never far away.

The cross-asset correlations are telling. Commodities are rallying even as the dollar holds steady. That’s a break from the usual pattern, where a strong dollar acts as a headwind. It suggests that the bid is coming from real demand, not just a currency effect. Meanwhile, equities are playing catch-up, and bond yields are refusing to budge. The market is sending a clear message: something is brewing beneath the surface.

Dig deeper, and you’ll find that the rally is broad-based. Energy is leading, with oil and gas prices surging on supply concerns. Metals are catching a bid as industrial demand rebounds and inventories dwindle. Even agricultural commodities are in play, as weather disruptions and logistical snarls tighten global supplies. The breadth of the move is what makes it dangerous for anyone caught short.

Strykr Watch

Technically, the commodities complex is in full breakout mode. The CRB Index (not shown, but implied by the +10.49% gain) is above its 200-day moving average for the first time since mid-2025. Momentum is strong, with RSI readings in the high 60s to low 70s across most subsectors. Key resistance levels are being taken out with little regard for historical supply zones. The next upside target is a retest of the 2022 highs, with energy and metals leading the charge.

Watch for pullbacks to the 50-day moving average as potential entry points. The rally is extended, but the lack of overhead resistance means momentum could carry prices much higher. Volatility is elevated, but not yet extreme. That’s a dangerous combination for anyone trying to fade the move.

The risks are obvious. A sharp reversal in the dollar could sap momentum. China’s rumored Treasury sales could destabilize funding markets, leading to a sudden risk-off move. And if central banks decide to lean against inflation with surprise rate hikes, the party could end in a hurry. But for now, the path of least resistance is higher.

On the opportunity side, this is a trader’s market. Momentum strategies are working, and dips are being bought aggressively. Look for relative strength in energy and metals, and don’t be afraid to chase if the setup is right. The trend is your friend, until it isn’t.

Strykr Take

Commodities are sending a message that the macro regime is shifting. This is not just a January effect, it’s the start of a new cycle. Position with the trend, but keep your stops tight. The melt-up is real, but so is the risk of a sudden reversal. Don’t get caught sleeping. This is where the action is, and it’s only just beginning.

datePublished: 2026-02-10 02:01 UTC