(Kitco News) – Gold is the best bet in the entire commodities complex next year, and if private investors join central banks in their diversification, the price could well exceed the $4,900 per ounce base case, according to commodity strategists at Goldman Sachs.
“The US-China AI and geopolitical power race and global energy supply waves drive our key convictions,” they wrote in their 2026 Commodities Outlook. “Commodity indices have delivered strong total returns in 2025 (e.g. BCOM 15%) because very strong returns in industrial and especially precious metals, which both tend to benefit from Fed cuts, have outweighed modestly negative returns in energy.”
Looking ahead, Goldman Sachs said their macro base case includes “sturdy global GDP growth and 50bp of Fed rate cuts in 2026,” which should support strong commodity returns once again.
The analysts highlight two major structural trends which they believe will drive the outlook for commodities in the coming year.
“First, on the macro side, commodities will likely remain at the center of the US-China race for geopolitical power and for tech and AI dominance,” they wrote. “Second, on the micro side, two large energy supply waves that started in 2025 drive our energy calls.”
Of all the commodities they reviewed, Goldman Sachs is most bullish on gold – and central bank demand is a big reason why.
“We expect central bank gold buying to remain strong in 2026, averaging 70 tonnes per month (close to its 66 tonnes 12-month average, but 4 times above the 17 tonnes pre-2022 monthly average), and contribute about 14pp to our predicted price increase by Dec26 for three reasons,” they said. “First, the freezing of Russia’s reserves in 2022 was a sea change in how EM reserve managers perceive geopolitical risks. Second, the estimated gold reserve share of EM central banks such as the PBoC remains relatively low vs. global peers (Exhibit 1, left panel), especially given China’s ambition to internationalize the RMB. Third, surveys show record high central bank gold appetite.”
The analysts also see upside risk to their gold price forecast due to a further broadening of this diversification to private investors - a trend that has already resulted in competition for bullion between investors and central banks, and which has contributed to the multi-year bull market.
“Gold ETFs account for just 0.17% of US private financial portfolios, 6 basis points below its 2012 peak,” they noted. “We estimate that every 1bp increase in the gold share of US financial portfolios—driven by incremental investor purchases rather than price appreciation—raises the gold price by 1.4%.”
Goldman Sachs also emphasized the insurance value that commodities provide for investor portfolios in the current geopolitical environment.
“Even as gold remains our single favorite long commodity, we see a strong role for broader commodity length in strategic portfolio allocations,” they wrote. “The very high geographic concentration of commodity supply and the increasing geopolitical, trade, and AI competition has led to a more frequent use of commodity dominance as leverage. This raises the risk of supply disruptions, which underscores the insurance value of commodities.”
“Equity-bond portfolios are not well-diversified when commodity supply losses drive both weaker growth and higher inflation as well as strong commodity returns,” the analysts warned.
Goldman Sachs expects the gold price to pull back to the low $4,200s in the first quarter of 2026, and rising back to current levels above $4,400 per ounce in Q2, before setting a new all-time high near $4,630 by the third quarter, and rising as high as $4,900 by the end of Q4.
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