Buy commodities, ‘worry about recession later’: Goldman Sachs

“Our economists view the risk of a recession outside Europe as relatively low over the next 12 months,” analysts including Sabine Shales, Jeffrey Curry and Damien Courvalin wrote in a note. “With oil the commodity of last resort in an era of severe energy shortages, we believe the pullback across the oil complex provides an attractive entry point for long-term investment.”

Goods Hit a record in June as Russia’s invasion of Ukraine disrupted production and disrupted supply chains, then eased recession concerns and central banks, including the Federal Reserve, tightened policy to control inflation. Gave. Last week, Fed Chair Jerome Powell indicated that more interest rate hikes would follow this halving, and global stocks hit a one-month low on Monday.

“From a cross-asset perspective, inflation may increase as inflation picks up and the Fed is more likely to be surprised on the surprise side,” Goldman said in the note, titled ‘Buy Commodities Now. ‘Worry about the recession later’. It added: “Commodities, on the other hand, are the best asset class to own during the late cycle phase, where demand remains above supply.”

Other major Wall Street banks have been more cautious on outlook commodities in recent months. Among them, Citigroup Inc warned in July that crude could fall to $65 a barrel by the end of this year if a demand-crippling slowdown strikes. Brent crude was at $101.70.

Goldman Sachs cautioned that the road ahead may not be easy, especially if the greenback makes gains, a trend that would make commodities more expensive for holders of other currencies. “We recognize that the macro outlook remains challenging and the US dollar may rise further in the short term,” it said.

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