The volatile commodity market has experienced a rebound. During Asian trading hours today (February 19), gold and crude oil continued their upward trend, with gold prices once again surpassing the $5,000 per ounce level. Overall, analytical institutions remain optimistic about the future prospects of commodities, with hard assets becoming a new standard allocation for investors.

As of 17:00 on the 19th, London spot gold closed at $5,015 per ounce, marking a year-to-date increase of over 16%. WTI crude oil futures and Brent crude oil futures have recently seen significant gains, with the main Brent crude futures contract price rising above $70 per barrel, also recording a year-to-date increase of nearly 17%.

Although the commodity market experienced substantial adjustments previously, it has gradually stabilized recently.

Goldman Sachs has recently released several research reports on the trends in the commodity market. The firm stated that in a world full of uncertainties, investors continue to diversify into hard assets, which will significantly boost the commodity market. Fund flows from investor diversification can drive substantial price increases in the short term, as the commodity market is smaller than the stock and bond markets.

Goldman Sachs believes that, influenced by the following three factors, the hard asset rotation creates greater upside potential for precious metals and copper compared to oil and natural gas:

First, market size. Due to the (very) small size of the metal markets, fund flows from investor diversification can lead to larger price increases.

Second, supply response. Rising energy prices can stimulate shale oil supply, thereby weakening the price boost from investment flows. In contrast, the supply of copper, and especially precious metals, is particularly constrained and largely involves long-cycle supply.

Third, storage. Increased supply and decreased demand lead to inventory accumulation until storage capacity limits are reached (energy storage capacity is lower than for metals), which can trigger high rollover costs for energy futures. In comparison, metals are easier to store, futures rollover costs remain relatively limited, and holding physically-backed assets (such as precious metals ETFs) involves no rollover costs.

In another research report, Goldman Sachs also analyzed the similarities and differences between the gold rally and the outlook for other commodities.

The firm pointed out that both gold and other commodities are supported by insurance-type demand. Sustained central bank gold purchases have supported the gold rally, as central banks hedge against geopolitical and financial risks. Similar risk management measures are increasingly evident in other commodity sectors. Following supply chain disruptions related to the pandemic in 2020 and turmoil in food and energy markets in 2022, policies in some economies show greater focus on commodity supply security, reflected in tariffs on commodity imports, export controls, state-supported domestic production forms, and government stockpiling increases.

However, there are significant differences between gold and other commodities, mainly in the supply-side response. The driver of insurance-type demand in the gold market lies in the market's inability to make meaningful supply adjustments, allowing such fund flows to persistently exert upward pressure on prices. In contrast, in other commodity markets, supply plays a greater role in shaping medium-term price trends and often helps mitigate (insurance-related) demand shocks, as producers respond to price signals. Even so, policies aimed at improving supply reliability might incentivize overproduction, lead to softer prices, and potentially trigger higher price volatility. Concentrated commodity supply can lead to greater risks of supply disruptions and price spikes.

Some domestic institutions also hold a relatively optimistic view on the commodity market. Zhongtai Securities believes that looking ahead, the commodity sector may experience wide fluctuations in the short term to digest pressure, but the medium-term structural upward trend remains unchanged. In the short term, core varieties in the commodity sector will mainly see wide fluctuations, and caution is needed against fund stampedes under panic sentiment. Short-term fluctuations do not represent a fundamental reversal but are a phase of adjustment in funding and sentiment. The precious metals rally is built on geopolitical volatility and the debt cycle, and gold's performance can still be expected after leveraged positions are cleared. From a medium-term perspective, as the supply-demand gap remains unclosed, the commodity sector will continue to rise after stabilization. The core logic supporting this round of commodity increases, including geopolitical games, rigid demand from AI+ industrial upgrades, and structural supply-demand gaps, has not substantially changed. As short-term panic sentiment subsides and fund crowding returns to reasonable levels, the sector will revert to being driven by fundamentals, and the medium-term upward trend remains sustainable.

Looking at changes in the crude oil and gold-related ETF markets, the scale of many representative products has increased significantly, indicating rising allocation enthusiasm among domestic investors. Regarding crude oil, the "Guotai CSI Oil and Gas Industry ETF," which tracks oil and gas industry stocks, latest circulating share count is 1.859 billion shares, with a circulating scale of 26.73 billion yuan, representing a surge of over 9 times year-to-date. For gold, the leading product "Huaan Gold ETF" latest circulating share count is 11.252 billion shares, with a circulating scale reaching 119.122 billion yuan, marking a 252% increase over the past year.