Print Friendly and PDF

Commodities Headed for
Bull Market in 2021 On
Inflation Fears, Stimulus – Goldman Sachs

(Reuters) – A weaker U.S. dollar, rising inflation risks and demand driven by additional fiscal and monetary stimulus from major central banks will spur a bull market for commodities in 2021, Goldman Sachs said.

The bank forecast a return of 28% over a 12-month period on the S&P/Goldman Sachs Commodity Index (GSCI), with a 17.9% return for precious metals, 42.6% for energy, 5.5% for industrial metals and a negative return of 0.8% for agriculture.

Markets are now increasingly concerned about the return of inflation, the Wall Street bank said.

Expansionary fiscal and monetary policies in developed market economies continue to drive interest rates lower and create demand for hedging the tail risks of inflation, lifting demand for precious metals, Goldman Sachs said in a note.

Goldman forecast gold prices at an average of $1,836 per ounce in 2020 and $2,300 per ounce in 2021, and expects silver prices to be at around $22 per ounce in 2020 and $30 per ounce next year.

Gold, widely viewed as a hedge against inflation and currency debasement, has gained 26% this year, benefiting from unprecedented global stimulus and near-zero interest rates.

Non-energy commodities could see an “immediate upside” as the market balances tighten ahead of expectations on strong demand from China and weather-driven risks, the Goldman Sachs analysts said.

The bank maintained a “neutral” view on commodities in the near term and “overweight” in the medium term.

Editor’s Note: Reuters reporting by Brijesh Patel in Bengaluru


The Resource Investor
Copyright 2020-22 | All Rights Reserved
Reproduction in whole or part is strictly prohibited
without prior written permission
NOTE: The Resource Investor does not itself endorse or guarantee
the accuracy or reliability of information, statements or opinions
expressed by any individuals or organizations posted on this site
PLEASE READ DISCLAIMER


Web Site Designed & Maintained by
Gemini Communications

This website is a publication of the
Bull & Bear Media Group, Inc.
Editor@TheBullandBear.com