Anindya Banerjee, Senior VP & Head of Research – Currency, Commodities and Interest Rates at Kotak Securities, shares his comprehensive outlook on commodity markets for 2026. With Indian commodity markets showing renewed momentum, precious metals are trading near one-week highs on safe-haven demand, while copper approaches record levels globally.

Gold-Silver Ratio Signals Structural Shift

The gold-silver ratio currently stands at 60 as of January 2026, indicating significant market dynamics. Historically operating between 60-100, this ratio has experienced a structural transformation over the past five years.

Silver's classification as a critical mineral by several countries, combined with limited recycling and supply constraints, suggests the gold-silver ratio could trend toward 40 or lower over time.

Bullish Outlook for Precious Metals

Banerjee maintains a bullish stance on both gold and silver for the next 3-6 months. Gold's primary driver remains de-dollarization, as central banks and institutions diversify away from dollar assets. Recent geopolitical developments reinforce this trend.

Gold has emerged from a prolonged consolidation phase, while silver benefits from both monetary and industrial demand in an already supply-deficit market.

Copper Rally Driven by Fundamentals

Copper's sharp rally to near-record highs reflects both fundamental and speculative factors. The metal sits at the heart of electrification, AI, semiconductors, and clean energy initiatives. Years of underinvestment have created supply constraints, with no major new mines expected in the near term.

The copper market could remain in deficit through 2026 and possibly 2027, supporting the long-term bullish trajectory despite short-term speculative influences.

Commodity Response to Geopolitical Risks

During geopolitical stress, commodities react in a specific sequence:

• Gold reacts first - Benefits immediately from monetary diversification
• Silver and copper follow - Critical for future industrialization
• Oil responds differently - Well-supplied market remains under pressure

Despite geopolitical tensions, oil markets remain well-supplied with potential for additional supply from regions like Russia and Iran.

Key Levels and Investment Strategy

For the current week, investors should monitor these critical levels:

Banerjee's top commodity picks for 2026 include silver, gold, copper, and aluminum, while recommending avoiding long-only positions in crude oil due to bearish supply dynamics.

Portfolio Diversification Approach

For 2026 commodity investment, Banerjee recommends a "tripod strategy": invest some amount immediately to avoid FOMO, deploy portions via systematic investment plans (SIPs), and maintain cash reserves for sharp market corrections. This approach balances immediate exposure with strategic positioning for potential opportunities.

Silver delivered exceptional returns in 2025, recording a historic surge of nearly 161% according to Tata Mutual Fund. The precious metal reached an all-time high of $86.62 per ounce on December 29, 2025, before retracing to $72 per ounce at the start of 2026 due to profit booking and CME margin hikes.

Key Drivers Behind Silver's Rally

Tata Mutual Fund identifies three primary factors driving silver's exceptional performance:

Industrial consumption represents approximately 50% of global silver demand, with significant usage in solar panels, electronics, and electric vehicles. This industrial component provides fundamental support to silver prices beyond traditional precious metal investment demand.

Supply limitations create structural challenges for the market. Since silver is predominantly mined as a by-product of other metals, global supply cannot easily scale to meet rising demand. China's new export rules requiring licenses only for large producers could potentially widen the global deficit from 2,500 tonnes to over 5,000 tonnes per year.

Market Fundamentals and Global Demand

The silver market faces a significant supply-demand imbalance that has persisted for multiple years:

Globally, mined silver supply in 2025 was estimated at 813 million ounces, while total demand including industrial and investment applications reached approximately 1.24 billion ounces. This creates a structural deficit that has continued for the fifth consecutive year, supporting price appreciation.

India emerged as a major demand driver, importing over 170 million ounces in the first ten months of 2025. The country experienced a particularly strong surge of 2,600+ tonnes during September-October, highlighting robust retail and industrial demand in the domestic market.

Investment Outlook and Strategy

Tata Mutual Fund maintains a cautiously optimistic view on silver's prospects. The fund believes silver may continue its long-term bullish trend due to its dual role as both a precious and industrial metal. However, short-term price corrections remain possible due to profit booking, portfolio rebalancing, and potential demand-supply revisions in 2026.

Given silver's inherent volatility, Tata Mutual Fund recommends investors consider staggered investments or systematic investment plans (SIPs) rather than lump-sum purchases. This approach can help reduce risk while providing exposure to potential upside opportunities.

Investment Options and Risk Considerations

Investors seeking silver exposure have several options:

• Mutual funds and ETFs focused on precious metals provide indirect access
• Systematic investment plans help manage volatility through rupee-cost averaging
• Global factor monitoring including supply shortages, geopolitical developments, and central bank policies

Investors should carefully review scheme documents as mutual fund investments remain subject to market risks. Key factors to monitor include supply shortages, geopolitical developments, central bank policies, and interest rate expectations.

Comparative Performance

Silver significantly outperformed other commodities and asset classes in 2025:

Silver's 161% gain exceeded platinum's 135% rise, palladium's 72% increase, gold's 66% appreciation, and copper's 44% advance. The metal also outpaced major stock indices and cryptocurrencies, reflecting strong investor demand for alternative assets during the period.