Goldman Sachs constructive on commodities, including Gold
NEW YORK (Scrap Register): Goldman Sachs is upbeat on commodities despite recent weakness, looking for gold to be among the markets that rise. Following financial markets, commodity prices sold off sharply over the past week, with the S&P GSCI down 5.6% from the January 26 peak.
This sell-off, however, was less than the 10.2% decline in the S&P 500. Ironically, the catalyst for the equity move was rising inflation concerns in the face of strong economic activity indicators, which further reinforces our view that commodity markets are set to outperform other asset classes once the current liquidation flows subside, Goldman added.
As is the case for equities, we view this move as primarily positioning, technical and USD [U.S. dollar] driven, with the magnitude of the declines well correlated to both the strength of the prior price trend and the level of speculative length.
Despite the sell-off, we find that recent fundamental data is still supportive of our constructive view on the asset class. On Thursday, Goldman upped its one-year gold forecast to $1,450 an ounce. Goldman analysts cited expectations for recovering demand in emerging-market nations.