The last year has belonged to the commodity market.
From a relentless rally in gold and silver through 2025 to the sudden surge in crude oil prices in early 2026 amid escalating geopolitical tensions, commodities have moved from the sidelines to the centre of investor attention.
For portfolio allocators, this presents both an opportunity and a dilemma. Each of these commodities is being driven by a distinct narrative — safe-haven demand, industrial recovery, and supply disruption — making the choice far from straightforward.
As the new financial year begins, the key question is not just which commodity will outperform, but how investors should position across gold, silver, and oil to balance returns, risk, and diversification in FY27.
To answer that, it is essential to first understand what is driving each of these commodities—and whether those drivers are durable enough to sustain returns into FY27.
What’s driving interest in commodities?
In FY26, gold prices rose 50%, as strong central bank demand and a diversification trend supported the yellow metal.
Central banks continued with easy liquidity to counter the negative growth impact from the tariff situation, which made it cheap to borrow and invest some of that capital into gold. The US dollar weakened by roughly 10% in 2025, influenced in part by these dovish policy signals.
Since gold is traded globally in dollars, a softer dollar lowers its price for overseas buyers, making gold more affordable and therefore more appealing.
The ongoing debt crisis fears in the US, currency debasement fears and geopolitical concerns have also sparked significant buying in the bullion.
During the recently concluded fiscal year, silver’s 120% rise has eclipsed that of gold’s. Silver is a high beta outperformer; structural supply deficit and industrial demand (EV, solar, AI) have driven silver prices during most of the last fiscal year. Meanwhile, it has also acted as a safe haven due to rising geopolitical uncertainty.
However, both precious metals have seen a decline in the last one month due to the US-Iran conflict, acting against their nature.
Kaynat Chainwala, AVP Commodity Research, Kotak Securities, said that this adjustment reflects short-term pressures, including margin call liquidations, a stronger US dollar, and recalibrated expectations regarding Federal Reserve rate cuts.
However, she added that the underlying bull case, supported by elevated global debt levels, ongoing central bank accumulation, concerns over currency debasement, and sustained geopolitical uncertainty, remains intact.
Oil prices, which rose 55% in March alone, ended FY26 with a 58% rise. “Oil prices are driven by geopolitics, not pure fundamentals. Currently, prices have surged due to Middle East tensions and could spike to $130–$200 in extreme scenarios. However, long-term outlook shows oversupply risk + demand slowdown,” said Nirpendra Yadav, Sr. Research Analyst at Bonanza.
Gold vs oil vs silver: Which asset could outperform in FY27?
Analysts believe investors should maintain exposure to all three commodities, but the key lies in getting the balance right. While crude oil prices are expected to remain elevated in the near term due to supply disruptions amid the West Asia conflict, the outlook for returns varies across assets.
Among the three, silver is seen as the potential outperformer, provided supportive macro and industrial demand conditions play out. Meanwhile, gold is likely to retain its role as a portfolio stabiliser rather than a high-return play.
Across all three assets, the prevailing message is one of risk asymmetry, said Chawla.
“Crude offers the highest near-term return potential but is also subject to the greatest downside should diplomatic efforts succeed and tensions surrounding the Strait of Hormuz subside. Gold provides the most resilient medium-term foundation and is best accumulated during price dips rather than pursued at elevated levels. Silver, owing to its dual role as both a precious and industrial metal, presents the highest beta opportunity if industrial demand recovers in parallel with geopolitical stabilisation,” she opined.
Yadav of Bonanza also echoed similar views, suggesting that silver could be the highest probability “outperformance asset” in FY27 but with very high volatility. As for gold, he believes that the recent volatility hasn’t broken the long-term bullish structure, which suggests gold will remain the “anchor asset” in FY27.
Lastly, he added that crude oil could be a short-term trader’s asset, not a stable investment for long-term investors.
Commenting on how to structure the portfolio, Chawla advised a two-pronged approach: maintaining a core allocation to gold as a macroeconomic hedge while assuming tactical exposure to crude within defined risk parameters. “Silver, given its dual precious and industrial character, warrants selective accumulation on weakness for investors with a higher risk tolerance.”
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
