Trade Analysis & Reviews: 30.08.2022 - Now is the perfect time to...

30.08.2022 01:06 PM

Now is the perfect time to buy commodities, says Goldman Sachs

Investment bank Goldman Sachs note that now is the perfect time to trade commodities.

Goldman's analysts Sabine Schels, Jeffrey Currie and Damien Courvalin noted that investors should consider how to access commodities as stocks are likely to suffer even bigger losses.

Nevertheless, Goldman Sachs considers recession fears exaggerated.

According to analysts, oil is the commodity of last resort in an era of severe energy shortages, and the downturn in the entire oil complex provides an attractive entry point for long-term investments.

A supply chain problem pushed oil prices to record highs in June. However, recent recession worries have prompted a pullback in prices due to fears of a slowdown in demand.

Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole symposium on Friday doubled down on those concerns as he remained hawkish and signaled that rates could stay high longer.

Stocks fell in response to Powell's comments, with the Dow Jones Industrial Average falling more than 1,000 points on Friday and another 300 points on Monday.

According to the forecast of Goldman Sachs economists, the outlook for stocks is even more dire than expected. Stocks could take a hit as inflation remains high. And now is the time to return to commodities. They noted that commodities are the best asset class to hold late in the cycle when demand remains above supply.

One of the obstacles may be further growth of the US dollar index, which is trading near 20-year highs. This makes buying goods in other currencies more expensive.

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