LONDON, May 11 -- Goldman Sachs Group Inc. (GS) Monday raised its 12-month gold and copper forecasts slightly but marginally cut its nickel outlook, noting the recent selloff in commodity markets is a good buying opportunity for industrial metals but warning of downside risk to precious metals.

It raised its 12-month gold forecast to $1,335 a troy ounce from its previous April 12 estimate of $1,320/oz, and upped its 12-month copper outlook to $7,850 a metric ton from $7,835/ton.

"We expect gold prices to continue to rise from current levels as we expect real interest rates to remain low on a continuation of accommodative U.S. monetary policy," the bank said. "The heightened concerns over European sovereign debt presents upside risk to our current forecasts in the near term," Goldman added.

But the bank said that in the longer term, it continues to see considerable downside risk, should the U.S. Federal Reserve tighten monetary policy earlier than expected.

The bank's nickel outlook was cut slightly to $17,140/ton from $17,150/ton.

"Although nickel prices have led the complex in recent months, owing largely to prolonged strike-related supply outages in Canada that have sharply tightened the North America balance, recent efforts to increase production despite the strike suggest this tightness will likely begin to resolve in coming months," Goldman said.

"In contrast, we maintain that copper fundamentals, which have begun to tighten, will likely continue to do so as developed markets demand continues to improve against slowing but still robust emerging markets demand and believe that copper will be the first of the metals to hit supply constraints on a sustained basis," the bank added.

Goldman's 12-month aluminum forecast was slightly raised, to $2,180/ton from $2,170/ton, and its zinc forecast was increased to $2,720/ton from $2,710/ton. Its silver forecast was raised to $22.3/oz from $22.10/oz.