According to Reuters, Goldman Sachs (GS) anticipates accelerating growth in commodity returns in the next year, driven by higher spot prices resulting from easing of monetary policy and concerns about a global recession. Additionally, as it is often quoted, commodities offer a strong hedge against geopolitical supply risks, further boosting their appeal as an asset class.

The bank's projections indicate a 21% increase in commodity returns over the next 12 months, particularly on the oil-heavy S&P GSCI Commodity Index. According to GS’s own declaration, the S&P GSCI® is a composite index of commodity sector returns representing an unleveraged, long-only investment in commodity futures that is broadly diversified across the class. The returns are calculated on a collateralized basis with full reinvestment. The combination of these metrics offers investors a representative and realistic picture of realizable returns attainable in the commodities markets.

Energy is expected to lead the way with returns of approximately 31%, closely followed by industrial metals with a projected increase of 17.8%. The index (.SPGSCITR) has decreased by less than 1% year-to-date. Across metals, Goldman expects a sharp tightening in copper and aluminum inventories into the middle of the decade, gradually driving up prices from the second half of 2024.