Goldman Sachs has issued one of the most divergent commodity calls in recent memory, urging investors to take diametrically opposed positions in gold and oil. In its 2026 Commodities Outlook, the bank's team led by Daan Struyven argues that gold could surge to $4,900 per ounce while crude oil sinks into the mid-$50s—a trade driven by what the bank calls the "Power Race" and "Supply Waves."

The recommendations reflect Goldman's view that structural forces are pulling commodities in dramatically different directions. For gold, central bank buying and eventual Fed rate cuts provide tailwinds. For oil, a massive supply surplus threatens to overwhelm demand, pushing prices toward levels that would pressure producer economics worldwide.

The Gold Thesis: Central Banks Keep Buying

Goldman describes gold as its "single favourite long commodity" for 2026—strong language from a bank known for measured recommendations. The $4,900 per ounce price target by December 2026 implies roughly 40% upside from current levels around $3,500.

The core driver is institutional demand. Central banks—particularly those in emerging markets seeking to diversify away from the U.S. dollar—have been accumulating gold at a pace not seen in decades. Goldman expects this trend to continue:

"Central banks are expected to buy around 70 tonnes of gold per month next year, roughly four times the average pace seen before 2022," the analysts wrote. The buying reflects a structural shift in reserve management, not a tactical position that will reverse.

Several factors are driving central bank accumulation:

  • Dollar diversification: The weaponization of dollar-based sanctions following Russia's invasion of Ukraine has prompted many countries to reconsider their reserve composition.
  • Inflation hedging: After years of elevated inflation, central banks view gold as protection against future purchasing power erosion.
  • Geopolitical insurance: In an era of great power competition, gold offers an asset that cannot be frozen or confiscated through the financial system.

The Fed Factor

Beyond central bank buying, Goldman expects cyclical support from Federal Reserve policy. The bank anticipates that interest rate cuts later in 2026 will reduce the opportunity cost of holding gold, which pays no yield.

Historically, gold has performed well during Fed easing cycles. Lower rates reduce the attractiveness of bonds and cash relative to gold, while the dollar typically weakens—providing an additional tailwind for dollar-denominated commodities.

The combination of structural buying and cyclical support creates what Goldman views as a compelling risk-reward setup.

The Oil Thesis: Supply Overwhelms Demand

Goldman's oil outlook stands in stark contrast to its gold bullishness. The bank expects Brent crude to average $56 per barrel in 2026—roughly 8% below current levels—with West Texas Intermediate at $52.

The bearish view reflects a fundamental imbalance between supply and demand:

  • Production growth: Non-OPEC countries—particularly the United States, Brazil, and Guyana—continue to increase output, adding supply that offsets OPEC+ production restraints.
  • Demand moderation: Chinese oil demand has slowed as the economy transitions toward services and as electric vehicle adoption accelerates. Developed market demand is flat or declining.
  • Inventory build: Goldman projects that 2026 will see an acceleration in OECD commercial stockpile builds, putting downward pressure on prices.

"Barring large supply disruptions or OPEC production cuts, lower oil prices in 2026 will likely be required to rebalance the market," the analysts wrote. The bank sees net downside risks to its already-bearish forecast.

The OPEC Dilemma

OPEC+ faces a strategic challenge that Goldman's analysis highlights. The producer group has been restraining output for years, yet prices have continued to slide. The constraints have ceded market share to non-OPEC producers while failing to support prices at levels comfortable for most member countries.

Unwinding those constraints would likely trigger a price collapse. Maintaining them continues to transfer market share to competitors. There is no easy path forward, and Goldman expects prices to remain under pressure regardless of OPEC+ decisions.

Other Commodity Calls

Beyond the headline gold and oil recommendations, Goldman's outlook includes views on other commodities:

Copper: The bank's "favorite industrial metal" is expected to consolidate around $11,400 per metric ton in 2026. Goldman cites electrification—including electric vehicles, renewable energy, and grid upgrades—as driving nearly half of copper demand. Long-term supply constraints support the bullish structural view.

Lithium and Nickel: Goldman advises continued patience on battery metals. Chinese investment in overseas supply, particularly in Africa and Indonesia, is flooding the market. The bank sees lithium prices dropping another 25% by year-end 2026 before eventually stabilizing.

Natural Gas: A multi-year LNG glut is expected as global supply rises approximately 50% by 2030 compared with 2024. This should weigh on prices in Europe and Asia, though regional dynamics and weather can create short-term volatility.

Portfolio Implications

For investors, Goldman's divergent commodity calls carry several implications:

  • Gold as portfolio insurance: The bank's conviction on gold suggests meaningful allocation may be warranted. Gold ETFs, mining stocks, and physical holdings all offer exposure.
  • Energy sector caution: Lower oil prices would pressure exploration and production company earnings. Investors may want to reduce energy exposure or focus on the most cost-efficient producers.
  • Copper for the long term: While near-term consolidation is expected, the electrification thesis supports copper exposure for multi-year investors.
  • Battery metals patience: Those interested in lithium or nickel should wait for clearer signs of a supply-demand rebalancing before establishing positions.

Risks to the Thesis

Goldman acknowledges risks to both sides of its commodity call:

Gold risks: A significant shift in central bank behavior—perhaps driven by fiscal pressures that force gold sales—could undermine the structural demand story. Unexpectedly aggressive Fed policy could also reduce gold's appeal.

Oil risks: Geopolitical disruptions—whether in the Middle East, Russia, or elsewhere—could take supply off the market and spike prices. OPEC+ could also pursue deeper cuts than currently planned if prices fall too far.

The Bottom Line

Goldman Sachs has placed a strong bet on commodity divergence in 2026. Gold, supported by central bank buying and eventual Fed easing, is the bank's top pick with a $4,900 target. Oil, burdened by oversupply and moderating demand, is expected to struggle in the mid-$50s. For investors, the call offers a clear framework for commodity exposure—one that may prove prescient if the bank's analysis of structural forces proves correct.