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Producers across the world are likely to ramp up output of commodities such as copper and lithium, limiting the kind of runaway price gains seen in gold even as markets anticipate a prolonged rally in raw materials, Goldman Sachs said.
Gold has surged to record highs, while a range of other commodities have also climbed, as governments and investors seek the perceived “insurance” value of hard assets amid geopolitical tensions and policy uncertainty, the US bank said in a report addressing what the bullion rally might signal for the broader commodities complex.
But copper, shale oil and other resources are unlikely to mirror gold’s trajectory. The main distinction, Goldman argued, lies in how quickly supply can respond.
“Supply plays a larger role in shaping medium-term price trends across other commodities and often helps dampen insurance-related demand shocks as producers respond to price signals, especially in markets like US shale oil and gas, where production can ramp up quickly,” analysts Lina Thomas, Daan Struyven and Samantha Dart wrote.
Policies aimed at strengthening supply security could also encourage overproduction in some markets, potentially increasing concentration risks and price volatility.
“While we expect long-term gold prices to rise further, we see more differentiated returns across the broader commodity space in the base case,” the analysts said.
Gold prices have climbed sharply since 2023, supported by strong central-bank buying, geopolitical strains and a growing shift among investors to hedge against US dollar volatility.
