Goldman Sachs urges consumers to "go for gold" as China puts pressure on other commodities

Goldman Sachs believes that gold is the most likely to see a price increase in the near future due to its role as a hedge against risk. However, weak demand from China led to a more selective and less constructive view of other commodities.

Goldman analysts stated on Monday that "imminent Fed rate reductions are poised bring Western capital into the gold markets, a component that was largely absent from the sharp gold rally seen in the last two year," in a report titled 'Go For Gold'.

The spot gold price has risen 21% this year. It has broken records after records, and reached a record high of 2,531.60 dollars per ounce in August.

Wall Street bankers have shifted their gold forecast from end-2024 to early 2025. They cited a price-sensitive China markets.

We believe that this same price sensitivity would also protect against hypothetical price drops, which could likely lead to a resurgence of Chinese purchasing.

Goldman has taken a more conservative stance on oil. It expects to see a smaller surplus this summer, and one that is slightly higher than expected in 2025.

Last week, the bank cut its Brent average forecast for 2025 and its price range by $5 per barrel. The reason given was a weakening China demand.

The bank has a clear view of the global gas market, but it is a negative one as upcoming global capacity additions in liquefied gas will drive European Natural Gas Prices (TTF) down.

The bank pushed back its copper target for end-2024 of $12,000 per ton until after 2025. It noted that the sharp inventory reduction it anticipated will probably come much later than originally thought.

The average copper price forecast for 2025 is now $10,100, a significant drop from their previous estimate, which was $15,000 per ton. This is because refined copper production continues to be high despite supply problems in the key copper producing countries.

Goldman's outlook on other industrial metals was less positive. It shifted its $2,600 per ton year-end aluminum target from the end of 2025 towards the end of 2025, and reduced its forecast for 2025 to $2,540.

The lender has said that it will temporarily suspend its coverage of zinc, because it is still bearish on nickel.

(source: Reuters)