Goldman Sachs analysts say the recent confrontation with Iran has sharpened structural demand for power and metals more than for oil and gas, and that holding a diversified commodity position remains a persuasive hedge for investors.
The bank highlighted a 16-week disruption in the Strait of Hormuz this year that substantially reduced supplies of both crude oil and natural gas. That interruption contributed to a broad-based rise in energy prices and added downside risk to the global economic outlook, according to the analysts.
Commodity returns so far this year have outpaced those of equities and bonds, though the bank noted that they have done so with greater volatility. By May - three months into the conflict - prices had moved sharply from pre-war levels: crude oil rose 43% and oil products climbed 63%. European gas prices were up 50% while Asia liquefied natural gas prices increased 70% relative to pre-conflict benchmarks.
The analysts reiterated their view for global growth this year at 2.4%, which they said is 0.4 percentage points below expected 2025 levels. They added that, had the conflict endured, the hit to global growth could have been far larger - potentially a reduction of about 2 percentage points from pre-war expectations.
On the metals and power side, Goldman Sachs argued the episode "ultimately reinforces many of the themes supporting power and metals demand, more so than oil and gas," pointing to a range of structural drivers. The analysts named accelerating electric vehicle adoption, expanding renewable power generation, heightened grid investment, elevated defence spending and intensified competition in artificial intelligence as factors that are "highly supportive of power, copper, lithium and aluminum demand."
Responding to price strength earlier in the year - when LME copper briefly topped $14,000 per tonne in May - the bank raised its LME copper forecasts. It now sees end-2026 copper at $13,735 per tonne and an average for 2027 of $13,800 per tonne.
Goldman Sachs also estimated that upgrades to grid and power infrastructure alone would likely account for over 60% of copper demand growth by 2030 relative to 2025 levels. The analysts projected that by 2035 a copper price of $15,000 per tonne would be needed to sustain production from aging mines, increase scrap collection rates and underpin development of new mines.
On the non-ferrous precious metals side, the bank maintained its gold forecast at $4,900 per troy ounce for end-2026. That view is anchored in part to ongoing diversification of reserves by emerging-market central banks - a trend the analysts connected to the 2022 freezing of Russia’s reserves. In a World Gold Council survey cited by the bank, a record 45% of 76 central banks said between February and May that they expect to increase their gold reserves over the next 12 months.
Goldman Sachs noted near-term headwinds for rate-sensitive exchange-traded fund demand stemming from a hawkish Federal Reserve. Nevertheless, the bank expects ETF positioning in gold to climb gradually, aligning with a delayed easing cycle it anticipates in the second half of 2027.
Analysts at the bank set out three distinct inflation regimes that imply different commodity hedges: a late-cycle inflation environment that favours cyclical commodities; supply disruption scenarios best protected with a broad commodity basket excluding precious metals; and institutional credibility risk situations where gold is the preferred hedge.
Finally, the analysts warned that metals refining is highly geographically concentrated, a structural trait that leaves both power and metals markets exposed to tightening shocks.