Goldman Sachs Group Inc. said investors should bet on higher commodities prices in the next year as manufacturing picks up around the world, the first time the bank has recommended an overweight position for the asset class in more than four years.
Purchasing managers’ indexes strengthened in all major regions in October, helping to spur gains in iron ore, copper and other base metals. Goldman raised its iron ore price forecasts, citing an unexpected resilience in steel usage and a demand boost coming from broad restocking, as well as its oil price estimates into next year.
“The recent re-acceleration in global PMIs suggests commodity markets are entering a cyclically stronger environment,” Goldman analysts led by Jeff Currie wrote in a report e-mailed Monday. “Supply restrictions from policy actions should benefit oil, coking coal and nickel in the near term while economic reductions should boost natural gas and zinc.”
Goldman Sachs is the biggest commodities dealer on Wall Street by sales and for that reason the views of its analysts carry extra weight among natural resources investors.
The bank raised its outlook for returns on the Standard & Poor’s GSCI Enhanced commodity index to 9 percent on a three-month basis, compared with a previous expectation for a decline of 2 percent. It also forecasts returns of 11 percent and 6 percent on a six-month and 12-month basis, respectively.
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