Goldman Sachs analysts noted in a Tuesday report that in recent years, central bank gold purchases have driven a surge in gold prices as governments seek to hedge against geopolitical and financial risks. Now, similar "insurance" strategies are emerging in other commodity markets.

"As some of these risk management policies take effect, certain commodity markets appear to be shifting—at least temporarily—from a single global balance system to a more regionally segmented structure, increasing the risk of heightened volatility," the analysts wrote.

This shift stems from recent supply shocks.

Following supply chain disruptions in 2020 and food and energy shocks in 2022, policymakers have turned their focus toward securing access to critical materials, according to Goldman Sachs analysts. Specific measures include tariffs, export controls, support for local production, and the establishment of government strategic reserves.

Collectively, these measures are reshaping the commodity market landscape, making prices more sensitive to shocks.

Goldman Sachs cited copper as an early example. Despite an expected global supply surplus in 2025, copper prices have surged due to U.S. stockpiling behavior, which is drawing inventories away from international markets. This has left markets outside the U.S., where global benchmark prices are primarily anchored, tighter.

This dynamic is not limited to government sectors.

"Recent client feedback indicates that 'insurance-type' demand for various commodities—not only gold but also industrial metals like copper—has spread beyond the public sector. Private investors are turning to physical assets for diversification amid global policy uncertainty," the analysts wrote.

These capital inflows are supporting metal prices and amplifying market volatility.

For most commodities, price increases can stimulate supply-side adjustments. Producers typically ramp up output, which helps temper price spikes driven by "insurance" demand.

However, policies aimed at enhancing supply security can also trigger overproduction. This, in turn, may depress prices, squeeze out smaller producers, and lead to greater supply concentration, thereby increasing the risk of future supply disruptions and sharp price fluctuations.

Gold remains structurally different, however.

Goldman Sachs analysts noted that nearly all the gold ever mined in human history remains above ground, with annual supply relatively stable and slow to respond to price changes. This means that demand driven by risk concerns can sustain higher gold prices for longer periods.