Commodities Are Your 2026 Portfolio Insurance, Here’s Why According To Goldman Sachs

by | Dec 22, 2025 | General

When investors think about insurance, they usually think about bonds or cash — not barrels, tons, or ounces. For Goldman Sachs, it’s commodities.

As supply chains grow more concentrated, U.S.–China competition intensifies, and geopolitical conflicts increasingly spill into trade and resources, commodities are increasingly behaving less like cyclical trades and more like portfolio protection.

In their latest outlook, strategists Daan Struyven and Samantha Dart highlighted the “insurance value” of commodities, noting that they sit at the intersection of geopolitics, artificial intelligence, electrification, and energy security.

The result is a market defined less by broad index moves and more by sharp divergence beneath the surface.

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Gold: From Safe Haven To Strategic Asset

Gold — as tracked by the SPDR Gold Shares (NYSE:GLD) — remains Goldman’s highest-conviction call heading into 2026, even after rising more than 65% in 2025. The firm does not tie that strength to fear or inflation.

Instead, Goldman points to structural demand from central banks, especially in emerging markets. Since Russian reserves were frozen in 2022, reserve managers have reassessed geopolitical risk in practical terms.

Gold, unlike foreign currency reserves, carries no counterparty risk.

As central banks diversify, Goldman sees sustained buying pressure continuing into 2026, with upside risk if private investors begin reallocating even modest portions of their portfolios back to gold.

“We expect central bank gold buying to remain strong in 2026, averaging 70 tonnes per month, close to its 66 tonnes 12-month average, but 4 times above the 17 tonnes pre-2022 monthly average” Struyven said.

In this framework, gold is less about inflation or fear and more about sovereignty and insurance in an increasingly fragmented global system.

The investment bank expects gold to rise to $4,900 by the end of 2026.

Copper vs. Aluminum: One Transition, Two Outcomes

Industrial metals tell a more complex story. Copper stands out as Goldman’s preferred long-term metal. Demand comes from electrification, power grids, artificial intelligence infrastructure, and defense spending. Supply remains the constraint. Copper mines face long development timelines and persistent bottlenecks.

Production struggles to respond quickly when demand rises.

In 2025, the brown metal — tracked by the United States Copper Index Fund (NYSE:CPER) — has risen 33%, the fund’s best year since its inception.

Aluminum faces the opposite problem. Large-scale capacity expansions, driven largely by Chinese overseas investment, risk pushing supply ahead of demand.

Despite aluminum’s role in the energy transition, Goldman expects prices to lag copper meaningfully.

Energy: The Big Supply Wave

Energy markets are being reshaped by supply waves that move at very different speeds.

Goldman expects oil markets to remain oversupplied through much of 2026 as the final phase of a major production wave weighs on prices.

This keeps downside pressure on crude in the near term, even as longer-term balances eventually tighten later in the decade.

“We forecast Brent/WTI to decline further to 2026 averages of $56/52 (vs. $59/56 forwards) as the last big supply wave leaves the market in a 2.0mb/d oversupply,” Goldman Sachs said.

Natural gas and LNG, however, are entering what Goldman describes as the largest supply expansion in history. With global LNG capacity set to surge through the early 2030s, European and global gas prices are expected to face sustained pressure.

Ironically, this glut may tighten U.S. gas markets as exports rise — creating a growing divergence between domestic and international pricing.

Goldman Sachs expects lower European gas (TTF) and global LNG prices relative to US gas prices next year. This will tighten the TTF-Henry Hub spread from $8.40/mmBtu this year to $5.40/$3.05 in 2026/27. 

The Hidden Commodity: Electricity

Perhaps the most underappreciated constraint in the outlook is electricity itself.

The rapid expansion of AI-driven data centers is pushing U.S. power demand growth above GDP growth, tightening regional grids and raising the risk of price spikes and reliability issues.

“A majority of US regional power markets are already at or below critical spare capacity levels based on our estimates,” Struyven said.

Unlike China, which continues to add power capacity at scale, the U.S. faces bottlenecks that could slow technological progress if infrastructure fails to keep pace.

In this sense, power availability becomes a new form of commodity scarcity — one that could shape both economic growth and geopolitical competitiveness.

A Market Defined by Differentiation

Goldman’s 2026 outlook makes one thing clear: commodities can no longer be treated as a single macro trade.

Geopolitics, supply concentration, and technological change are creating winners and losers across metals, energy, and power markets.

The real challenge for investors isn’t predicting whether commodities will rise or fall. It’s identifying which materials become essential — and which quietly lose their leverage — in a world increasingly defined by competition for tech power, national security, and economic resilience.

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