Overview
Goldman Sachs analysts argue that the ongoing conflict with Iran has reinforced structural demand for power and metals, making them more attractive than oil and gas for portfolio diversification. They note that the 16‑week disruption in the Strait of Hormuz reduced oil and gas supplies, pushing energy prices higher and threatening the global economic outlook.
Commodity Price Movements
Year‑to‑date, crude oil prices have risen 43% and oil product prices 63% above pre‑war levels. European natural gas prices have increased 50%, while Asian liquefied natural gas has rallied 70% over the same period. The firm projects global GDP growth at 2.4% for the current year, which is 0.4 percentage points lower than the forecast for 2025. A prolonged conflict could have cut global growth by an additional two percentage points relative to pre‑war expectations.
Copper Forecast
The analysts cite electric‑vehicle adoption, renewable power generation, grid investment, defence spending and artificial‑intelligence competition as key drivers that support demand for power, copper, lithium and aluminium. Accordingly, Goldman Sachs raised its LME copper price forecast to $13,735 per tonne for the end of 2026 and an average of $13,800 per tonne for 2027, after prices briefly topped $14,000 per tonne in May. They estimate that grid and power infrastructure will account for more than 60% of copper demand growth by 2030 versus 2025 levels, and that a price of $15,000 per tonne would be required by 2035 to sustain aging mines, increase scrap collection and enable new mine development.
Gold Forecast
For gold, the firm maintains its end‑2026 target of $4,900 per troy ounce, citing diversification by emerging‑market central banks following the 2022 freezing of Russia’s reserves. A record 45% of the 76 central banks surveyed by the World Gold Council between February and May indicated plans to increase their gold holdings over the next 12 months.
Market Implications
The strategists warn that a hawkish Federal Reserve poses near‑term headwinds for rate‑sensitive commodity‑linked ETFs, but they expect ETF positioning to rise gradually as monetary easing is delayed until the second half of 2027. They identify three inflation regimes and corresponding commodity hedges: late‑cycle inflation favouring cyclical commodities; supply‑disruption inflation best hedged with a broad commodity basket that excludes precious metals; and institutional‑credibility risk best mitigated with gold. Finally, they note that metals refining remains highly geographically concentrated, leaving power and metals markets vulnerable to tightening supply shocks.