Markets continue to revolve around oil as investors parse the market impact of the Iran conflict, with Goldman Sachs strategists telling Bloomberg TV that crude is the dominant force across asset classes. Christian Mueller-Glissmann of Goldman described oil as the "lead asset," adding that "all markets are correlated to oil" as traders await a period of stabilization after quick price moves.
Goldman's team has adjusted its oil outlook notably in recent days. Daan Struyven, who leads the firm's oil market research, raised price forecasts for the second time in less than two weeks, pointing to sustained disruptions through the Strait of Hormuz and a build-up of structural supply risks. In the bank's scenario, flows through the key shipping route remain at just 5% of normal levels for six weeks, followed by a gradual one-month recovery - a sequence the bank expects would materially tighten global supply.
That outlook underpins more forceful near-term price expectations. Struyven said prices should continue trending higher amid ongoing uncertainty and that a "growing risk premium" may be required to damp demand and protect against shortages. Goldman now projects XBR/USD will average $110 in March-April, up from its previous $98 view and well above its 2025 assumptions. The bank also lifted its 2026 assumptions, seeing Brent at $85 and WTI/USD at $79, citing deeper inventory drawdowns and a reassessment of effective spare capacity that supports higher long-dated prices.
Central banks face a narrow path
Mueller-Glissmann emphasized that the current episode has yet to inflict extensive growth damage, but he expects that balance to shift. He said inflation is likely to run "a bit higher" while growth may be "a bit lower" through the remainder of the year. That combination creates a difficult environment for central banks, which the strategist said are now acting more forcefully after what he described as a delayed policy response in 2022.
"It’s a very tough spot," Mueller-Glissmann said, referring to policymakers' efforts to contain inflation risks stemming from higher energy prices. The strategist also noted that the dollar's role as a safe-haven is less clear this time around, despite its recent strength. He said, "We are still leaning more towards fading the dollar strength eventually," and expressed a preference for the Swiss franc and yen as alternatives.
Why gold has slipped
Gold has come under pressure for several reasons that Mueller-Glissmann outlined. First, he said gold's appeal as a hedge against the dollar has been diminished in the current market environment. When the dollar strengthens, investors tend to reduce gold holdings as a diversifier, shrinking marginal demand. That effect has been a key factor in the recent pullback.
Second, tighter financial conditions and a more aggressive policy backdrop have weighed on the metal. Third, positioning that was elevated at the start of the year has begun to unwind. Gold entered the year with significant exposure initially driven by central bank buying and later supported by investor inflows. Rising market volatility prompted part of that positioning to unwind, with some retail investors selling gold to raise liquidity amid risk-off moves. Gold's prior strength as a safe-haven also meant it became a natural source of funds during those episodes.
Finally, Mueller-Glissmann pointed to the speed of the recent decline, saying derivatives probably amplified the move. Options activity, he suggested, likely contributed to sharper and more mechanical selling dynamics than would otherwise have occurred.
Despite the near-term weakness, the strategist did not describe the pullback as a change to the longer-term case for gold. "It does tell me, it's probably an opportunity for longer term investors," he said, indicating the correction could present a buying window for investors with extended horizons.
Implications for markets
The combined message from the Goldman strategists is that oil is currently the main driver across markets, with elevated price expectations and supply-risk-driven forecasts. That dynamic is complicating central bank choices between containing inflation and supporting growth, while currency moves and market positioning have translated into notable pressures on gold.
Investors and policymakers alike are watching whether the supply disruptions through the Strait of Hormuz ease and how quickly energy markets, currencies, and safe-haven assets like gold recalibrate as a result. For now, higher oil prices and shifting investor positioning are central to the evolving cross-asset narrative.