Commodity markets will outperform other asset classes once spooked markets regain their balance, according to a note from Goldman Sachs Group Inc., and strength in emerging markets is what makes commodities so attractive. 

Commodities have suffered in conjunction with equities in recent sessions, but the fundamentals underlying the assets are still strong, the analysts said in a note on Friday, Feb. 9.

Emerging Markets Lead the Way

Goldman noted that the bulk complex of iron ore, met coal and steel rebar all traded higher this week compared with last week, which suggested that emerging market-traded commodities shrugged off the selloff in developed markets because their fundamental situation hasn't changed. 

"Our positive view on commodities is driven by a robust economic backdrop for emerging markets," Goldman's note said. "The beta of EM equities to the S&P 500 has been trending lower, and is currently below its historical average."

Gold Is Still a Safe Haven

Gold rallied in trading Thursday, Feb. 8, but the commodity is off 2.5% from its peak even in the midst of a massive market selloff. Goldman said it still sees the yellow metal as a safe haven but it will take time for the money to flow. 

"Looking closely at the daily dynamics of gold during these periods, it takes, on average, around a month for gold to start rising following the start of the equity selloff. We believe the key reason for this is that gold is first and foremost a hedge against fears that become systemic risks," Goldman wrote.

Investors are waiting to see whether this current selloff is systemic or just a blip on the radar.

Oil Selloff Isn't as Scary as It Looks

The petroleum sector has led the way for declining commodity prices, so when viewed as a whole the commodity sector looks like it's doing worse than it actually is. But the good news is that oil time spreads, which are a more accurate way to gauge sector health than spot prices, have proved to be pretty resilient.   

"This, of course, does not preclude the market from developing a bearish narrative," Goldman wrote, but the firm's view of the strength of emerging markets bodes well for oil demand. 

"Our forecast for a cyclically tight oil market in 2018 is not driven by a conservative view on either U.S. or OPEC production growth," Goldman wrote. "It is instead driven by our expectation that the global growth momentum and the EM growth acceleration will support oil demand growth well above consensus expectations."