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Goldman Sachs Cuts Forecast for Commodity Returns (Update1)
Jan 15,2010 08:57CST
industry news

Jan. 14 (Bloomberg) -- Goldman Sachs Group Inc. cut its 12- month forecast for commodity returns following a jump in prices for oil and industrial metals and predicted that gold would reach a record within six months.

The S&P GSCI Enhanced Total Return Index of 24 commodities will gain 12.5 percent in the next 12 months, the bank said in a report dated yesterday. Goldman predicted a 17.5 percent advance in a Dec. 3 note. The index rose as much as 4.2 percent since then. Energy will add 18 percent, from a Dec. 3 forecast of 25 percent, and industrial metals 10 percent, from 15 percent.

"We continue to expect improving developed market economic growth during the first half of 2010 on top of ongoing robust demand from the emerging markets,' the bank's analysts, including Allison Nathan and Jeffrey Currie, wrote in the report. "This upside is somewhat diminished post the recent strong rally, particularly for oil and metals.'

Crude-oil prices have advanced for four consecutive weeks on expectations that a global economic recovery and a cold snap in the Northern Hemisphere will buoy demand for energy. The London Metal Exchange index of six industrial metals has also gained for a month.

Gold for immediate delivery will reach $1,275 an ounce within six months and $1,365 in a year, Goldman said. The metal traded at a record $1,226.56 on Dec. 3.


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