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Goldman Sachs Group Inc. anticipates a rise in commodities throughout the year due to central banks’ actions to lower interest rates, potentially bolstering both industrial and consumer demand, as stated by analysts Samantha Dart and Daan Struyven in a note dated March 24.
The bank predicts that raw materials could see a 15% increase in 2024, driven by declining borrowing costs, recovering manufacturing, and ongoing geopolitical tensions. Notably, commodities like copper, aluminum, gold, and oil products are expected to experience an upswing, though investors are advised to be discerning as gains may not be uniform.
So far, commodities have shown modest gains in the first quarter, with crude oil strengthening, gold reaching new highs, and copper surpassing $9,000 per ton. Both the US Federal Reserve and the European Central Bank have indicated their intent to lower borrowing costs amidst easing inflation. Additionally, China has signaled further support for its economic recovery.
Goldman analysts emphasized the positive impact of US rate cuts on commodity prices, particularly metals like copper and gold, with crude oil also expected to benefit. They noted that these price increases tend to amplify over time as looser financial conditions stimulate growth.
Goldman’s cautiously optimistic outlook aligns with similar sentiments expressed by other market observers. Macquarie Group Ltd. recently noted a cyclical upswing in commodities driven by tightened supplies and a global economic upturn. Jeff Currie, previously of Goldman Sachs and now with Carlyle Group LP, also foresees gains as the Fed reduces rates, while JPMorgan Chase & Co. sees potential upside in gold.
Goldman Sachs’ year-end forecasts include copper reaching $10,000 per ton, aluminum at $2,600 per ton, and gold at $2,300 per ounce, potentially setting a new record. Currently, base metals are priced at $8,884 and $2,306 per ton on the London Metal Exchange, while gold is near $2,167 per ounce.
Looking ahead, the analysts maintain a positive outlook on gold, anticipating renewed interest from exchange-traded funds (ETFs) as the Fed eases monetary policy. However, they remain cautious about battery metals like nickel, cobalt, and lithium carbonate, believing it’s premature to declare an end to their respective bear markets.
