Goldman Sachs Says the Next Commodity Cycle Belongs to Gold and Metals

Goldman Sachs is telling clients to look beyond the old oil-shock playbook. The next commodity cycle, according to the bank's commodities team, is increasingly being shaped by metals, power and the strategic industries that consume them: artificial intelligence, electrification, defence and central-bank reserve diversification.

The call matters because it reframes gold's latest pullback. Bullion has retreated from the extremes reached earlier in the year, weighed down by a firmer dollar, higher yields and a Federal Reserve that has not given investors the easy-money pivot they wanted. Spot gold was trading close to $4,071 an ounce on Wednesday after a rebound of more than 2% from softer U.S. jobs data and lower yield pressure. That still leaves the metal below its January highs, but Goldman’s message is that the structural case has not disappeared.

The bank’s commodities co-head Samantha Dart has argued that gold “is not done,” with emerging-market central-bank diversification acting as a durable anchor. Goldman’s December 2026 gold forecast remains $4,900 an ounce, a target built on high official-sector demand, portfolio diversification and the possibility that private investors continue to treat bullion as insurance against fiscal, geopolitical and currency risk.

This is not the same gold trade that dominated previous inflation cycles. Oil was once the commodity that transmitted geopolitical stress most directly into consumer prices. Today, Goldman sees a broader map of chokepoints. Electric vehicles can reduce future oil demand, but they increase demand for copper, lithium, aluminium and grid infrastructure. AI data centres reduce neither power use nor metal intensity. Defence spending adds another layer of demand for critical materials, while refining and processing capacity remains concentrated in a handful of countries.

That is why gold’s role is evolving. It is not just a hedge against inflation; it is becoming a reserve asset for a multipolar world. A World Gold Council survey of 74 reserve managers found a record 45% planned to increase gold holdings over the next year, while 93% already held the metal. Separately, an OMFIF survey found that 30% of central banks planned to increase gold allocations in the short term. For emerging-market reserve managers, the appeal is straightforward: gold has no issuer, no default risk and no direct political counterparty.

The same logic is visible in vaulting behaviour. Central banks are not only buying gold, they are rethinking where it is stored. More institutions are diversifying away from traditional storage hubs such as London and New York, increasing domestic or alternative overseas storage as geopolitical risk becomes part of reserve management. That does not end the dollar’s dominance, but it shows why bullion demand has become less sensitive to short-term price weakness than in previous cycles.

The oil-to-metals shift also creates a paradox for gold. If Middle East supply shocks lift crude, inflation fears can support bullion. If the same shocks accelerate EV adoption and investment in alternative energy, the resulting demand for copper and power can reinforce a metals cycle that keeps commodities strategically scarce. Goldman has estimated that stronger EV penetration after the Hormuz-related oil shock could cut global oil demand by as much as 0.32 million barrels a day by late 2027. That would be bearish for crude at the margin, but bullish for the electrical and mineral supply chains needed to replace it.

Copper is the industrial side of the same thesis. Goldman has kept copper among its favoured metals, citing electrification and constrained mine supply. The bank has also raised its end-2026 copper view in recent commentary as AI infrastructure, grids and mine tightness reshape the demand balance. For gold, the implication is not direct consumption, but portfolio positioning: investors are being pushed toward a world where real assets, rather than paper duration alone, absorb the risk of shocks.

The near-term risk is still rates. Gold pays no yield, and a hawkish Fed can punish it quickly when the dollar rises and real yields climb. That explains the correction from earlier highs. But the correction has not removed the three pillars under the market: official-sector buying, private investor diversification and geopolitical uncertainty.

Goldman’s bigger argument is that commodities are no longer a simple bet on oil demand. The market is moving toward a system where power grids, data centres, defence budgets, electric vehicles and central-bank reserves are all competing for scarce physical inputs. In that world, gold does not need to behave like copper to matter. It only needs to remain the metal investors and reserve managers reach for when the financial system looks too political, too indebted or too exposed to the next supply shock.