Goldman had just entrusted Ismail and Stark with bigger roles. Ismail formally assumed control of the consumer arm -- known as Marcus -- at the beginning of the year.(REUTERS)
Goldman had just entrusted Ismail and Stark with bigger roles. Ismail formally assumed control of the consumer arm -- known as Marcus -- at the beginning of the year.(REUTERS)

Goldman raises 12-month commodities returns forecast to 15.5%

The Wall Street bank also forecast returns of 6.2% and 15.1% on commodities over three- and six-months respectively on the S&P/GSCI Goldman Sachs Commodity Index (GSCI) in a note dated Monday.
Reuters |
PUBLISHED ON MAR 02, 2021 02:39 PM IST

Goldman Sachs Commodities Research has raised its forecast for returns on commodities to 15.5% over the next 12 months and said they remained the best inflation hedge.

The Wall Street bank also forecast returns of 6.2% and 15.1% on commodities over three- and six-months respectively on the S&P/GSCI Goldman Sachs Commodity Index (GSCI) in a note dated Monday.

Spot-priced commodities have benefited from higher-than-anticipated economic activity as it has created sharp deficits regardless of the growth rate, Goldman said.

In January, the bank had forecast returns of 5.8%, 9.5% and 10.2% on commodities over three-, six- and 12-month periods, respectively.

Goldman said it saw a return of 19.3% for energy, 19.1% for industrial metals, 15% for precious metals, 4.8% for agriculture and a negative 0.6% return on livestock over the 12-month period.

It said the pandemic represented a structural shift in the way governments interact with the economy and commodity demand would be further boosted by redistributional and environmental policies, as well as supply chain initiatives.

"Diversification out of fixed income into gold can continue, especially if the focus around inflation overshoot risks increases," it said.

The bank added real rates were unlikely to return to pre-crisis levels for a long time due to residual slack in the economy and a dovish change in the reaction function of the Federal Reserve.

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