As recession risks rise following historic U.S. tariff hikes, a Goldman Sachs analyst advises investors to get strategic with commodities — going long on gold and short on oil.
In a recent episode of Goldman Sachs Exchanges, senior strategist Allison Nathan sat down with Daan Struyven, co-head of Global Commodities Research, to discuss how investors can hedge against growing recession fears.
According to Struyven, the safest and most promising options right now are gold and oil — but in opposite directions.
Gold’s Long-Term Outlook Shines Bright
Gold has already surged past $3,000 per troy ounce in 2025, and Struyven expects it could rise another 10% to $3,300 by year’s end. In the week since Struyven shared his analysis, gold has already surged by nearly 8% to just around $3,250.
In a scenario where a U.S. recession materializes, Struyven says the price of gold could soar as high as $4,250. Key drivers of this bullish outlook include:
- Potential Federal Reserve rate cuts totaling up to 200 basis points
- Continued central bank gold purchases
- A surge in investor demand via ETFs and futures
- Uncertainty around U.S. governance and global trust in U.S. assets
Even recent sell-offs in gold were attributed more to forced liquidity sales than a shift in fundamentals. “Positioning is quite clean,” said Struyven, calling this an attractive entry point for long positions in gold.
Gold, Struyven advises, “should be a great hedge against recession risk.”
Oil: A Recesion Hedge — in Reverse
While gold is set to rise, oil could experience a steep fall. Brent crude is currently around $65 per barrel, but Goldman forecasts it will dip to $62 by the end of 2025 and could plunge to $55 or lower in 2026. The key reasons are a potential double shock:
- Falling demand due to recessionary pressures
- Rising supply from OPEC+ as compliance frays and patience wears thin
Struyven notes that spare capacity is already high, especially in Saudi Arabia and Russia. With prices approaching U.S. producers’ breakeven levels (around $50/barrel), some are hedging aggressively with put options to lock in protection.
“If you were to see a global slowdown in a typical U.S. recession, but keeping OPEC policy constant, Brent by the end of 2026 would be in the mid-fourties,” said Struyven, adding that in a worst-case scenario — a full unwind of OPEC cuts and a global downturn — prices could dip under $40.
The Strategy: Long Gold, Short Oil
Struyven argues this moment presents a hedging opportunity: buy gold and short oil. It’s not just about market direction — it’s about protecting portfolios. Struyven emphasized that oil put options remain relatively cheap, making them an efficient tool to hedge recession risk.
“It’s time to hedge with commodities,” he said, summarizing Goldman’s new investment tagline.
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