Commodities will advance this year as central banks in the United States and Europe take steps to lower interest rates, helping to support industrial and consumer demand, according to Goldman Sachs Group Inc.
Commodities could return 15% through 2024 as borrowing costs fall, manufacturing recovers and geopolitical risks persist, analysts, with Samantha Dart and Daan Struyven among them, wrote on March 24. Copper, aluminum, gold and petroleum products could rise, according to the bank, which also highlighted the need for investors to be selective as gains will not be universal.
Commodities have made a modest advance in the first quarter, with crude oil strengthening, gold reaching a record and copper exceeding US$9,000 a ton. Monetary authorities in both the US and the European Central Bank have signaled their intention to reduce borrowing costs this year as inflation declines. In addition, China has expressed greater support for its recovery.
“We find that US rate cuts in non-responsive environments lead to higher commodity prices, with the biggest boost experienced by metals (copper and gold in particular), followed by crude oil,” they said. the analysts. “Importantly, the positive impact on prices tends to increase over time, as the growth momentum from more flexible financial conditions trickles down.”
Goldman’s cautiously bullish outlook echoes comments from other market watchers. Commodities are entering a new cyclical rally helped by tighter supply and a recovery in the global economy, Macquarie Group Ltd. said earlier this month. Jeff Currie, former head of commodities research at Goldman and now at Carlyle Group LP, has also forecast gains as the Fed cuts rates. Also, JPMorgan Chase & Co. highlighted the bullish potential of gold.
Among Goldman’s year-end forecasts, copper was at $10,000 a ton, aluminum at $2,600 a ton and gold at $2,300 an ounce, which would be a nominal record.
“In the medium term, we continue to maintain a constructive view on gold supported by eventual Fed easing, which should crucially revive largely dormant ETF buying,” the analysts said, referring to traded fund flows. . in a bag.
In contrast, and highlighting its call for a selective approach, the bank remained bearish on the outlook for battery metals such as nickel, cobalt and lithium carbonate. “We believe it is too early to put a decisive end to these respective bear markets” the analysts said.
While the Fed left interest rates unchanged last week, central bankers maintained their outlook for three cuts this year. Still, a gauge of U.S. inflation due in the coming days — the Fed’s preferred measure of underlying price pressures — likely remained uncomfortably high in February.
Source: La República