Goldman Sachs Group Inc. is more bullish on commodities than any time since the end of the supercycle in 2008. As economies around the world pick up, factories are humming, eating into stockpiles of raw materials and driving demand at miners and oil producers already facing limits on output.
Copper, iron ore and crude prices will extend gains this year, Goldman analysts Jeffrey Currie and Michael Hinds said. “The environment for investing in commodities is the best since 2004-2008,” they wrote in a research note.
Rising commodity prices will create a virtuous circle, improving the balance sheets of producers and lenders, and expanding credit in emerging markets that will, in turn, reinforce global economic growth, according to the bank.
Goldman sees copper rising in the next 12 months even after it racked up the biggest gains in eight years over the course of 2017. The metal, seen as a barometer of the world’s economic health, will jump about 12 percent to $8,000 a metric ton, according to the analysts, a level not seen since 2013.
The forecast establishes Goldman as one of the most bullish Wall Street banks. Citigroup Inc. sees copper averaging $7,125 a ton this year and Deutsche Bank AG at $7,175, according to data compiled by Bloomberg.
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