Bank of America is doubling down on its conviction that commodities will be the standout asset class of 2026, arguing that the sector sits at the intersection of accelerating economic growth, persistent fiscal expansion, and a geopolitical environment that increasingly favors hard assets over traditional safe havens. In a note to clients, a team of strategists led by Michael Hartnett positioned commodities—not equities, and not crypto—as the ultimate “run-it-hot” trade for the coming year, one that reflects the macro landscape emerging under the Trump administration and a potentially inflationary policy mix.

The framework builds on BofA’s earlier thesis that 2026 will be defined by a combination of fiscal largesse, reaccelerating global activity, and monetary conditions that remain far looser than in typical late-cycle environments. Such a backdrop, the bank argues, structurally advantages commodities, which tend to outperform when demand outstrips supply, inflation expectations rise, and economic volatility forces investors to hedge against geopolitical and currency risks.

A High-Conviction Call Backed by Market Performance

Commodities have already delivered unusually strong returns heading into late 2025. The Vanguard Commodity Strategy Fund, one of the most widely tracked commodity vehicles in the U.S., is up 17% year-to-date, outpacing the S&P 500. Sector-level market behavior reinforces the trend: industrials, which are heavily influenced by metals and energy inputs, have gained 17% in 2025, while utilities and energy stocks are up 15% and 7%, respectively.

A significant driver behind these gains is the AI data center boom, which has spurred surging demand for copper, steel, aluminum, natural gas, and electricity. As grid expansion, semiconductor fabrication, and hyperscale computing infrastructure absorb a growing share of global resource flows, investors are increasingly treating commodities as a structural—not cyclical—play on technological adoption.

Policy Tailwinds and the End of Globalization-as-Usual

BofA also argues that the Trump administration’s economic policies will amplify commodity demand in 2026. Fiscal stimulus, industrial policy, and tariff-centered trade strategies all tend to increase real-economy activity, raise inflation expectations, and place upward pressure on commodity pricing. Excess government spending has already supported commodity outperformance relative to bonds, which have struggled with rising issuance and higher term premiums.

At the same time, the bank highlights the global retreat from hyper-globalization. Fragmented supply chains, geopolitical conflict, export controls, and widening tariff regimes are reshaping trade flows. Commodities—essential, transportable, and strategically sensitive—naturally become more valuable in an environment defined by scarcity concerns and logistical friction.

This shift helps explain why gold has surged 60% in 2025, on track for its strongest year since the 1970s. Investors have embraced the metal both as an inflation hedge and as insurance against geopolitical instability. Hartnett’s team suggests that if a settlement emerges in the Russia-Ukraine conflict, energy prices—particularly oil—could rebound sharply, pulling other commodities along with them.

A Market on the Cusp of a Broad-Based Commodity Repricing

The bank’s conclusion is unusually direct: “long commodities” is the highest-conviction macro trade for 2026, and “long energy” is the most contrarian version of that trade. If inflation proves stickier than expected and fiscal stimulus continues, the setup resembles past cycles in which commodities dramatically outperformed financial assets.

With global supply tight, industrial demand rising, and investors reconsidering the role of real assets in portfolio construction, the coming year may mark the beginning of a broader repricing across the commodity complex. As BofA notes: “Soon all the commodity charts will look like gold.”