Ole Hansen, head of commodities strategy at Saxo Bank, said that the surge in energy prices and the decline in precious metal prices in 2026 underscore the need for diversification within the commodities sector, rather than simply betting on the rise or fall of individual commodities. Hansen stated that the commodities sector experienced disruptive market movements this month. "The Bloomberg Commodity Total Return Index (BCOMTR), which tracks a diversified basket of 25 major commodity futures including energy, metals, and agricultural products, performed nearly flat overall in October," he said. "However, beneath this lackluster overall performance, significant rotation occurred between sectors: the energy sector surged, with soft commodities also seeing some gains; grains and precious metals declined; and industrial metals weakened slightly." Energy led the gains, while agricultural products showed mixed performance . Hansen pointed out that tensions in the Middle East, supply disruptions, and rising risk premiums propelled the energy sector to outperform the broader market this month. "Brent crude and West Texas Intermediate crude led the gains, with U.S. diesel also strengthening. Tight inventories, limited export supply, and refinery maintenance delays further exacerbated market concerns about the supply side." The agricultural sector, on the other hand, saw mixed results. Precious metals stage a reversal, with multiple negative factors contributing to a downward trend. Hansen noted, "Precious metals have continued to experience sharp reversals, with silver and platinum ranking among the worst-performing commodities in October, and gold also weakening. Soaring bond yields and shifting market expectations regarding interest rates have increased the opportunity cost of holding these non-interest-bearing assets, putting pressure on the precious metals sector. At the same time, market concerns about global economic growth and the sustainability of AI-related investments have had a greater impact on silver and platinum, both of which have significant industrial demand." He added, "After the previous round of gains, speculative positions in the market were at a high level, further amplifying this correction; the technical breakdown triggered long liquidation, bringing trend-based selling pressure." Industrial metals remain resilient, with mixed bullish and bearish factors . Regarding industrial metals, Hansen stated that despite market concerns about an economic slowdown, weakening Chinese demand, and uncertainty surrounding US trade policy, industrial metals have shown relatively strong overall resilience. "Copper prices are particularly affected by rising exchange inventories and market speculation that the US may impose tariffs on refined metal imports; however, long-term demand expectations driven by electrification and infrastructure investment still provide some bottom support for copper prices." The stark contrast between past and present market conditions has completely reversed the power dynamics . "Compared to last year's market, the rotation within the commodity sector this year is even more astonishing," said Hansen. "Precious metals were the leading performers in commodities in 2025, with gains of approximately 80%; however, they have lagged behind in 2026, currently down about 11% this year. Conversely, the energy sector, which fell about 10% last year, has seen gains of nearly 100% so far this year, driven by supply disruptions caused by war and a sharp rise in crude oil and refined oil prices." Key takeaway: Diversified allocation to hedge against dramatic sector reversals Hansen stated that such dramatic shifts in the commodity sector "further illustrate the need for broad allocation across commodities, rather than limiting oneself to a few varieties. While diversified allocation cannot completely eliminate the risk of overall losses in an asset class, it can buffer the impact of dramatic reversals in a single sector." He concluded: "The key takeaway from 2026 is that commodity prices rarely move in sync. War reshapes the energy market; weather and harvest cycles influence agricultural products; and inflation, bond yields, growth expectations, and speculative positions drive significant fluctuations in metal prices. These driving factors will likely continue to play a role, and the importance of sector rotation may be no less than the overall direction of the commodity market."