Commodities Rally Reflects a Better Economy, but Also Poses Inflation Risks

A surge in prices for the raw materials that power manufacturing and transportation shows investors betting on a prolonged expansion—and a potential rebound in inflation. 

An index of global commodities prices, the S&P GSCI, has advanced 12% this year, outpacing the S&P 500’s 9.1% climb. Copper and oil have gained more than 10% and 17%, respectively. Even gold is posting fresh records, rising 13% to $2,332 a troy ounce.

The rally is rooted in expectations that economic growth will increase demand from the U.S. and China, analysts said. A pair of reports last...