Investing.com — The conflict with Iran has reinforced structural demand for power and metals more than for oil and gas, Goldman Sachs said, arguing that commodity diversification remains a compelling hedge for investment portfolios.
Goldman Sachs analysts said this year’s 16-week Strait of Hormuz disruption significantly reduced supply of both oil and gas, causing a broad increase in energy prices while threatening the global economic outlook.
Commodity returns for the year to date have come in well above those of equities and bonds, though with higher volatility, the broker said.
By May, three months into the conflict, crude oil and oil product prices had rallied 43% and 63%, respectively, against pre-war levels, while European gas and Asia prices rallied 50% and 70%.
The analysts said global GDP growth is expected at 2.4% this year, 0.4 percentage points below 2025 levels.
Had the conflict lasted longer, the negative impact on global growth might have been significantly larger at minus 2 percentage points from pre-war expectations.
The broker said the Iran episode “ultimately reinforces many of the themes supporting power and metals demand, more so than oil and gas,” pointing to increased electric vehicle adoption, renewable power generation, grid investment, defence spending and competition in artificial intelligence as drivers that are “highly supportive of power, , lithium and aluminum demand.”
On copper, Goldman Sachs raised its end-2026 and average 2027 LME copper forecasts to $13,735 and $13,800 per tonne, respectively, after prices briefly reached an all-time high of over $14,000 per tonne in May.
The analysts said grid and power infrastructure alone would likely drive over 60% of copper demand growth by 2030 versus 2025 levels. It added that by 2035, a price of $15,000 per tonne would be needed to sustain aging mines, lift scrap collection rates and support new mine development.
On , the analysts maintained its $4,900 per troy ounce end-2026 forecast, anchored by emerging-market central bank diversification following the 2022 freezing of Russia’s reserves.
A record 45% of 76 central banks surveyed by the World Gold Council between February and May said they expect to increase their own gold reserves over the next 12 months.
Near-term headwinds from a hawkish Federal Reserve weigh on rate-sensitive ETF demand, with the broker expecting ETF positioning to gradually rise consistent with a delayed easing cycle in the second half of 2027.
The analysts identified three distinct inflation regimes requiring different commodity hedges: late-cycle inflation calling for cyclical commodities, supply disruptions best hedged with a broad commodity basket excluding precious metals, and institutional credibility risk best addressed with gold.
The broker said metals refining remains highly geographically concentrated, leaving power and metals markets “vulnerable to tightening shocks.”
Source:
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