Commodity Outlook: Gold, Silver, and Oil Prices in the New Financial Year

Commodities Market Sees Shift in Investor Focus

The past year has witnessed a remarkable shift in the commodity market, with gold and silver experiencing a relentless rally in 2025, and crude oil prices surging in early 2026 amid escalating geopolitical tensions. This shift has brought commodities center stage, making them a focal point for portfolio allocators. However, the distinct narratives driving each commodity – safe-haven demand, industrial recovery, and supply disruption – present a dilemma for investors.

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 this, it is essential to understand what is driving each of these commodities and whether those drivers are durable enough to sustain returns into FY27.

Gold: A Safe-Haven Asset

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In FY26, gold prices rose 50%, driven by strong central bank demand and a diversification trend. Central banks continued to provide easy liquidity to counter the negative growth impact from the tariff situation, making it cheap to borrow and invest in gold. The US dollar weakened by roughly 10% in 2025, influenced in part by these dovish policy signals. As 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.

Silver: A High-Beta Outperformer

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Silver's 120% rise in FY26 has eclipsed that of gold's. Silver is a high-beta outperformer, driven by structural supply deficit and industrial demand. The metal 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.

Oil: A Geopolitics-Driven Market

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.

Portfolio Allocation

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.

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.