Metal prices have recently surged quite aggressively, coupled with ongoing geopolitical tensions adding to the uncertainty. The Federal Reserve's independence is also under unprecedented pressure. A sense of unease is beginning to permeate the market—inflation in 2026 could be much more severe than everyone thinks.

This issue concerns every investor's wallet. Currently, the inflation rate stubbornly remains above the 2% target, and if inflation continues to rise this year, those two rate cuts planned for 2026 might be derailed.

Interestingly, this concern has not yet been fully reflected in the broader market. Just look at the yield on the 10-year U.S. Treasury—on Thursday, it only nudged up to 4.16%, still within the volatile range since August last year; meanwhile, U.S. stocks, buoyed by AI themes and a rebound in bank stocks, are approaching record highs. This indicates that most investors still do not see inflation as the biggest threat right now.

But don’t let your guard down; the possibility of inflation unexpectedly surging this year does exist.

Prices of commodities like steel and copper have already shown significant increases. Some fund managers privately mentioned they are considering how to adjust their portfolios to cope with this situation. Ryan Weldon, responsible for U.S. cash and fixed income investments at IFM Investors, explicitly pointed out that rising metal costs are supporting the price floor of consumer goods like automobiles—this is precisely the signal that the Fed’s decision-makers see as a potential sign that inflation might regain the "wheel."

Since the beginning of 2025, gold and silver have surged significantly, and this upward momentum has clearly not yet been fully reflected in commodity prices.