AUS
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GER
ESP
ITA
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UAE
Highlights
- Gold seen as a strong hedge amid recession concerns
- Oil prices face pressure from rising supply and slowing demand
- Strategic outlook favors gold upside and oil downside risks
Amid growing concerns over a potential global recession, investors are increasingly eyeing a strategic shift toward assets that offer protection from market turbulence. A leading global financial institution, Goldman Sachs (NYSE:GS), has outlined a notable trade approach centered around gold and oil – suggesting a combination of long exposure to gold and short exposure to oil could serve as an effective hedge.
This strategy emerges as the US tariff agenda disrupts global markets, amplifying economic uncertainty. Analysts point to mounting signs of a broader economic slowdown, prompting shifts in asset allocation.
Gold's Resilience Shines Through
Daan Struyven, co-head of global commodities research at Goldman Sachs (NYSE:GS), maintains a structurally bullish stance on gold. Despite recent price volatility, the long-term outlook remains positive. Struyven highlights gold's unique role as a hedge, not just against the general risk of recession in the US and globally, but also against broader market uncertainties driven by shifting policies and institutional changes.
He projects gold prices could potentially reach as high as $6,752 per troy ounce under recessionary conditions. Factors such as trade policy tensions, monetary pressures from the Federal Reserve, and potential shifts in US governance continue to position gold as a safe-haven asset.
Oil Faces Demand Pressure and Supply Surge
In contrast, the outlook for oil is weighed down by a mix of subdued demand expectations and rising supply levels. Brent crude oil, currently priced around $101 per barrel, could decline to $92 by the end of 2025, and further to $87 by late 2026, according to Struyven’s forecast. In a deeper downturn, oil prices could even test levels near $63 per barrel.
Put options on oil, which are relatively inexpensive at present, offer investors a potential insurance-like mechanism against price declines.
OPEC's Strategy and Market Influence
OPEC’s decision to raise output in an effort to restore market balance and slow the growth of US shale production is adding further downward pressure on oil prices. The group’s substantial spare capacity gives it considerable influence in market stabilization efforts.
Amid this backdrop, the dual-positioning strategy – long gold and short oil – may align well with the current economic environment. As the world navigates rising macro risks and policy shifts, this approach highlights a thematic preference for defensive positioning in commodities.
