Goldman Sachs: Copper and Gold Take Over as Commodity Allocation Theme After Hormuz Trade Fades
Alina Collins
Goldman Sachs argues that falling oil prices after the Strait of Hormuz reopening do not end the commodity story — copper, gold, and power metals are taking over as the next allocation theme, driven by structural demand shifts and central-bank gold buying.
Oil prices fell — why are refined products lagging behind?
During the conflict, crude and refined products rose 43% and 63% respectively; European natural gas and Asian LNG surged 50% and 70%.
Crude has pulled back sharply since the strait reopened, but Goldman expects gasoline and diesel demand to rebound faster than supply repairs — refined-product prices will normalize more slowly.
This means → even as crude returns to normal, price pressure at the pump and the factory gate persists longer.
Slower growth plus rising inflation — why aren't stocks and bonds enough?
Goldman cut its global GDP growth forecast for this year to 2.4%, down 0.4 percentage points from 2025.
A longer conflict could have dragged global growth by as much as -2 percentage points versus the pre-war baseline.
This reflects a structural gap: when inflation rises and growth falls at the same time, a portfolio of only equities and bonds struggles to hedge — and that is precisely the case for commodity allocation.
Why is copper upgrading from "cyclical commodity" to "strategic input"?
Goldman notes that by 2030, power grids and electrical infrastructure could account for more than 60% of incremental copper demand.
In plain terms = AI, EVs, data centers, defense, and renewables all need copper — the buyer base has shifted from property developers to national strategies.
The result of this strategic demand shift: copper becomes less sensitive to both economic slowdowns and high prices — buyers purchase even in a downturn and cannot afford to stop when prices climb.
How high can copper go?
Supply faces long-cycle constraints: mines are deeper, ore grades are lower, and operating costs keep rising.
Expectations of potential U.S. copper import tariffs have already redirected tonnage toward America, tightening markets outside the U.S. significantly. Copper briefly topped $14,000/ton in May — a record — before settling back above $13,000.
Goldman raised its year-end 2026 and average 2027 LME copper forecasts to $13,735/ton and $13,800/ton, and estimates $15,000/ton is needed by 2035 to keep aging mines running and bring new supply online.
Why are central banks still buying gold?
Gold has rallied 123% since 2022, driven primarily by reserve diversification after Russia's sovereign assets were frozen.
A World Gold Council survey of 76 central banks (February–May) found a record 45% expect to increase their gold reserves in the next 12 months; roughly 90% expect global reserves to rise.
Goldman forecasts gold at $4,900/oz by year-end 2026, assuming central banks continue buying 50 tons/month in 2026. This means → as long as central banks maintain the logic of "don't put all your eggs in the dollar basket," the structural floor under gold holds.
Where will the next price spike come from?
Goldman argues the Iran conflict has reinforced themes like EVs, renewables, grid investment, defense spending, and AI competition — all of which are more supportive of power, copper, lithium, and aluminum demand while potentially dampening long-term oil-and-gas growth.
Rising industrial-metal prices and China's rare-earth export controls are already among the key drivers of the recent acceleration in U.S. core PPI; higher U.S. electricity prices are feeding through to consumer-level power inflation.
In plain terms = future price spikes may not be confined to oil and gas — power and metals markets are equally vulnerable. Goldman's checklist of verification variables includes: the pace of refined-product price normalization, copper flows toward the U.S., central-bank gold-buying cadence, and whether electricity prices, rare-earth controls, and industrial-metal prices continue transmitting into U.S. core PPI and household power bills. Unless these signals clearly reverse, the commodity allocation thesis cannot be written off as "a Hormuz trade that already ended."
Content is for reference only, not financial advice.