Goldman Sachs supports trade favoring gold and betting against oil amid growing fears of global recession

In the current tumultuous global financial landscape, repercussions from the US tariff program are leading many analysts to speculate about the likelihood of an impending global recession. Amidst these concerns, renowned financial institution Goldman Sachs suggests a strategic approach involving long gold and short oil positions to safeguard against potential risks.

Daan Struyven, co-head of global commodities research and head of oil research at Goldman Sachs, remains optimistic about gold’s long-term growth prospects despite recent market fluctuations. He views the current juncture as an opportune moment to invest in gold as a means of hedging against the looming threat of a recession, whether in the US or on a global scale. Upholding gold’s position as a valuable asset, Struyven projects that gold prices could climb to $6,752 per troy ounce in the event of an economic downturn. Additionally, he emphasizes that gold can serve as a shield against various recessionary catalysts, such as policy uncertainties emanating from the US, including trade policy shifts, Federal Reserve decisions, or alterations in governance that may jeopardize global investors’ confidence in US assets.

On the other hand, Goldman Sachs foresees a challenging trajectory for oil, forecasting a scenario marked by diminished demand and augmented supply—a “double whammy” effect. Leveraging the cost-effectiveness of oil put options, the institution advocates for short positions on oil. Struyven anticipates a decline in Brent crude oil prices from approximately $101 per barrel to around $92 per barrel by the conclusion of 2025, progressing further down to about $87 per barrel by the end of 2026. He even entertains the notion that oil prices could plummet further than the baseline forecast. Utilizing oil puts as a form of insurance against price slumps, there exists a possibility of a market rally driving prices up to approximately $63 per barrel in a worst-case scenario.

With a strategic eye on the market dynamics, OPEC’s decision to ramp up production efforts partly aims at rectifying compliance concerns and impeding the growth of US shale production. Notably, the impact of tariffs on US metal markets, notably copper, presents another dimension for consideration. Mr. Struyven acknowledges OPEC’s substantial surplus capacity, enabling it to maintain market stability and prop up prices. Consequently, he suggests a nuanced hedging approach for 2026, advocating for long gold positions coupled with short oil positions to navigate the intricacies of the evolving financial landscape.