Goldman Sachs Group Inc. cut its “near-term” outlook for commodities and reduced its forecasts for oil and coffee amid prospects for weak demand from China to Europe. The bank also exited a bet on lower gold prices.
Goldman Sachs lowered its three-month and 12-month return forecasts for the Standard & Poor’s GSCI gauge of 24 commodities to 2.5 percent, from 6 percent in three months and 3 percent in 12 months, according to the report dated today. The bank said it lowered its near-term commodities outlook to neutral from overweight. It exited its bet on lower gold prices, with a potential gain of 10 percent, while saying prices may fall even more.
“Commodity returns have dropped sharply so far in April as weaker-than-expected macroeconomic data releases in the U.S., Europe and China furthered concerns around global economic growth,” analyst Samantha Dart said in the report. “The negative sentiment in the market has weighed on cyclical commodity prices in particular.”
The GSCI gauge of 24 commodities slid as much as 1.1 percent today as a report showed Chinese manufacturing expanded at a slower-than-expected pace, providing more evidence of a pullback in the country’s economic growth. Commodities, which touched a nine-month low on April 18, are down 6.4 percent this year. The MSCI All-Country World Index of equities has gained 5.6 percent and Treasuries returned 0.7 percent, according to an index calculated by Bank of America Corp.
Goldman Sachs issued a sell recommendation on gold on April 10, before the precious metal plunged 13 percent in the two sessions through April 15, the biggest drop in three decades. Today, gold futures traded at $1,417.90 an ounce on the Comex in New York, up 7.3 percent from a 14-month low set on April 16. The bank said today that gold may trade at $1,530 in three months, $1,490 in six months and $1,390 in 12 months.
Goldman cut its near-term outlook for Brent oil to $100 a barrel, from a previous outlook of $110 a barrel, and lowered its 2013 forecast to $105 a barrel from $110 a barrel. The bank said it remains bullish on copper at lower prices. It reduced its three-, six- and 12-month forecasts for coffee to $1.45 a pound, after previously projecting prices would rise as high as $1.75 a pound in a year.