Precious metals have become the only commodity sector that not only grew but also held onto its gains. However, in my assessment, this growth may prove excessive. Analyzing the current situation, I conclude that gold has likely formed a sustainable peak in 2026, and we should expect a reversal in the second half of the year.
The key indicator is the chart where precious metals appear as the only sector that has moved into steady growth and remained there. I would call all other commodity segments "duds." Gold is the "beta" to metals, the leading commodity sector, and its dynamics largely determine the entire market. After record growth, when the price approached $5,500 per ounce in the first quarter, a large "red" annual candle formed on the chart — a classic pattern indicating a downward reversal after a strong impulse.
The comparison with 1980 is particularly telling. The last time such a premium for gold relative to the broad commodity index was observed was exactly then, and it was followed by a prolonged decline. The key difference in the current period is inflation. Today's conditions differ from 1980, which increases the risk of gold prices normalizing relative to other commodities. In other words, the bubble we are witnessing may burst with greater probability.
Commodities vs. Stocks: A Zero-Sum Game
I also draw attention to the connection between commodities and the stock market. The BCOM index is hovering near a new low relative to the total return of the S&P 500. This implies that commodities have only one key catalyst for outperformance — a decline in the stock market itself. This is a classic "lose-lose" situation for the commodity market: either stocks continue to rise, and commodities lag, or they fall, dragging all risk assets down with them.
Unlike 2000, when commodities also lagged behind stocks, the key difference now is precisely the dominant dynamics of gold. The precious metal has diverged significantly from other commodities, and the coming months will test the sustainability of this gap.
My conclusion: The current rise in gold resembles a classic "parabolic" peak, which historically ends in a deep correction. Investors should be extremely cautious: despite the appeal of precious metals as a safe-haven asset, current levels carry a high risk of reversal. The market is essentially pricing in a 1980 scenario, and ignoring this signal would be a mistake.