By Eric Onstad

LONDON (Reuters) – Commodities outperformed other assets this year as a recovery from the pandemic boosted demand though gold’s poor showing dented investor appetite.

Heading into 2022, commodities, which often perform well late in economic cycles, are due to remain competitive with equities as global growth extends its upward trek, analysts said.

“We like both equities and commodities and we have an overweight view for both in 2022. It’s hard to say which one will do better,” said Koen Straetmans, senior multi-asset strategist with NN Investment Partners in the Netherlands, which had 298 billion euros ($336 billion) under management at end September.

The S&P Goldman Sachs Commodity Index index has surged 35% this year, trumping the U.S. equity index S&P 500 for the first time in a decade.

The S&P 500 has gained 23%, the dollar index has added 7% while U.S. benchmark 10-year treasury bonds are down 3%.

(Graphic: Commodities Outperform other Assets in 2021, https://fingfx.thomsonreuters.com/gfx/mkt/movanqawypa/Commodities%20Outperform%20other%20Assets%20in%202021.png)

In commodities, coffee has been a standout, rocketing 84%.

Benchmark U.S. crude oil has surged 40%, copper has added 21% while gold has fallen, sliding 5%, partly due to expectations of interest rate rises.

(Graphic: Most Commodity Sectors Outperform in 2021, https://fingfx.thomsonreuters.com/gfx/mkt/byprjqwqype/Most%20Commodity%20Sectors%20Outperform%20in%202021.png)

Gold is a top focus among general investors and its erosion after gaining 25% in 2020 has hit flows into investment vehicles.

U.S. exchange traded funds (ETFs) in commodities have seen net outflows of $5.5 billion this year after inflows of $41 billion in 2020, Morgan Stanley data showed.

(Graphic: U.S. Commodity ETFs See Outflows Despite Sector Gains, https://fingfx.thomsonreuters.com/gfx/mkt/byvrjqnydve/U.S.%20Commodity%20ETFs%20see%20outflows%20in%202021.png)

(Graphic: U.S. Equities ETFs see Surge of Inflows, https://fingfx.thomsonreuters.com/gfx/mkt/lbvgnlyaxpq/U.S%20Equities%20ETFs%20see%20Surge%20of%20Inflows%20in%202021.png)

In 2022, top commodity consumer China is due to see weaker growth, but the government is likely to balance a crisis in the property sector with moderate stimulus, analysts said.

(Graphic: Chinese Industrial Production Eases, https://fingfx.thomsonreuters.com/gfx/mkt/znpnexalqvl/China%20Industrial%20Production%20Dec%202021.png)

Next year, as logistics disruptions ease, global commodity demand should be robust as industry catches up with restocking, but this may be offset by more plentiful supply of many raw materials.

“There will also be a number of macro headwinds, which should limit further upside for the commodities complex,” ING analysts said in a note.

($1 = 0.8872 euros)

(Reporting by Eric Onstad; editing by Jason Neely)