As recession concerns mount, Goldman Sachs has issued a clear strategy for investors looking to safeguard their portfolios. In the latest Goldman Sachs Exchanges episode, recorded April 8, 2025, Daan Struyven, Co-Head of Global Commodities Research and Head of Oil Research, advised investors to go long on gold and short on oil to hedge against a potential economic downturn. The recommendations come amid heightened economic uncertainty, fueled by recent tariff announcements and shifting market dynamics.

Gold: A Bullish Bet for Stability
Gold is positioned as a prime safe-haven asset, with Struyven emphasizing its resilience during market turmoil. Despite occasional sell-offs tied to forced liquidations during volatile periods, gold’s long-term outlook remains robust. “Investors are reluctant to liquidate gold positions because the long-term outlook is structurally very bullish,” Struyven noted. He highlighted gold’s role in hedging against recession risks, particularly those driven by U.S. policy uncertainties like trade tariffs or institutional changes. Goldman Sachs projects gold rising to $3,300 per troy ounce by year-end in a stagnation scenario, with potential to hit $4,250 in a full recession, driven by increased ETF demand and central bank purchases.

Oil: A Bearish Outlook with Hedging Potential
In contrast, Goldman Sachs is bearish on oil, forecasting Brent crude to fall from $64 per barrel to $62 by year-end and further to $55 by the end of 2026. Struyven pointed to a “double whammy” of declining demand in a slowing economy and rising supply from OPEC+ countries, which are increasing production to enforce compliance and curb U.S. shale growth. In a recession scenario, prices could plummet to the mid-$40s or even below $40 if OPEC fully unwinds cuts. To capitalize on this, Struyven recommends oil puts—insurance against lower prices—noting their affordability due to low implied volatility. “It’s time to hedge with commodities, with long gold positions and short oil positions, especially for 2026,” he said.

Investor Action and Broader Context
The strategy aligns with growing investor activity, as trading volumes for oil puts have surged, driven by macro and equity investors, as well as high-cost oil producers seeking protection. Meanwhile, gold’s positioning has reset to historical averages, offering an attractive entry point. Beyond commodities, Struyven noted interest in metals like copper, though cyclical challenges may temper short-term gains.

Goldman Sachs’ advice reflects a cautious yet proactive approach as economic indicators waver. With consumer surveys signaling rising inflation expectations and job security concerns, the firm’s call to buy gold and short oil offers a targeted way to navigate the risks of a potential recession.

For further details, the full transcript is available on Goldman Sachs’ website.