Goldman lists 3 factors that support long commodities positions

Goldman Sachs recommends long commodities positions as a portfolio hedge because geopolitical escalation, such as intensified shipping attacks or damage to energy infrastructure, could push energy prices significantly higher.

The has delivered a 36% total return year-to-date. The bank recommends a positive allocation tactically and structurally, though it expects and prices to moderate as Mideast supply adapts. A cold winter could lift European natural gas prices, it said.

Since the Iran war began, equity and particularly bond prices have become unusually sensitive to energy prices, which Goldman attributed to resilient global GDP growth and five years of above-target inflation that have led central banks to respond to the inflationary effects of higher energy prices.

The Iran and Russia-Ukraine wars, a high likelihood of a weather-disrupting Super El Niño and the potential for food export restrictions pose upside risks to agricultural prices.

This story was originally published by Hellenic Shipping News. Read the full story at Hellenic Shipping News →