Goldman predicts new boom for commodities

  • @BawdenTom

Goldman Sachs forecast that slumping commodity prices would rebound strongly in the next year as growth in demand from prospering emerging markets far outweighed the impact of the crisis in Western economies.

After the biggest quarterly decline in commodity prices since Lehman Brothers triggered a global meltdown in 2008, Goldman Sachs forecast that key manufacturing ingredients such as oil, aluminium, copper, nickel and zinc would jump in the coming months.

Jeffrie Currie, an analyst at Goldman Sachs, said: "With recent GDP revisions by our economists falling hardest on Europe but emerging market growth expectations still relatively solid, we continue to believe that demand growth in 2012 will be sufficient to tighten major commodity markets."

Despite forecasting a rebound in prices in 12 months time, Goldman cut its predictions on a range of commodities such as zinc, aluminium and nickel after the bank's economists cut their global growth forecast for next year to 3.5 per cent from 4.3 per cent.

Goldman reduced its 12-month forecast for Brent crude, which is currently trading around $101 a barrel, by $10 to $120. Meanwhile, it lowered its forecast for copper – down 28 per cent so far this year – by 15 per cent to $6,886.50 a tonne.

The S&P GSCI enhanced commodity index of 24 key industrial and precious metals and staple foods fell by 14 per cent in the three months to 30 September, leaving it down nearly 8 per cent on the year.

Industrial metal prices are down nearly 24 per cent this year, as optimism about a strengthening economy gave way to concerns about the the debt crisis in the West.