Three Reasons Why Goldman Is Going Long Commodities In 2024

While Goldman's chronically bullish bet on a commodity supercycle went painfully bust in 2023, and may have even claimed the job of the bank's top commodity strategist Jeffrey Currie who unexpectedly resigned in August, the bank's enthusiasm for commodities has never wavered, and in their 2024 outlook, Goldman's commodity strategists double, or rather triple and quadruple down, urging clients to - again - go long commodities as they see higher spot commodity prices, strong carry, and hedging value against geopolitical supply disruptions. Cutting to the chase, Goldman forecasts a 21% GSCI 12 month total return with significant contributions from higher spot prices (10%), roll returns (4%), and collateral returns (5%). More specifically, Goldman expects oil, oil products and several industrial metals to best leverage cyclical and structural support to generate returns in 2024. Accordingly, the bank recommends a "2024 Deficits" basket, defined as going long the GSCI Energy Index excluding US natural gas (we forecast a 34% 12M return) and long the GSCI Metals Index excluding nickel and zinc (25% 12M return).

Goldman lays out three specific reasons validating its bullish outlook, which we summarize below (more details to folllow):