NEW YORK (Reuters) - Copper and oil prices could leap on strong industrial demand in coming months and gold may rise further on inflation-linked buying, suggesting a new wave of gains for commodities.
Market strategists at this week's Reuters Investment Outlook Summit in New York said despite the slow jobs growth in the United States and the debt crisis in parts of Europe, the world economy was recovering and that was good for commodity prices -- battered lately by worries over global growth.
"It is really hard to buy things when everybody in the headlines is telling you not to," Maria Fiorini Ramirez, founder of New York investment advisory MFR, told the summit. "That is where you've got to be gutsy and that is where the big money is made."
Abby Joseph Cohen, a veteran investment counsel on Wall Street, agreed with that view.
"We think the global recession is over. We see strong demand coming particularly from the emerging economies who are building their infrastructure," said Cohen, who is senior investment strategist at Goldman Sachs (GS.N), Wall Street's leading commodities trader.
She said U.S. banks were no longer tightening lending conditions for small- and medium-sized businesses; federal interest rates were likely to stay low for a long time and stockpiles of some materials were falling faster than supply could come on board -- all good signs for basic resources like commodities.
"Our sense is that commodity prices will be rising again," Cohen told the summit.
Oil and copper prices have rebounded since Wednesday, spurred partly by encouraging oil consumption in the United States and bullish trade data out of China.
U.S. crude stockpiles fell a larger-than-expected 1.8 million barrels last week, showing an early burst in summer demand for oil in the world's largest energy consumer. China, the biggest importer of base metals and major consumer of oil and grains, reported a near 50 percent jump in exports for May from a year earlier.
U.S. crude traded at above $76 a barrel in New York on Thursday and market forecaster Stephen Schork said a test at $78 was possible before the week ended. Oil hit 10-month lows below $63 in May on concerns about high U.S. oil stockpiles.
U.S. copper rose above $2.90 a lb on Thursday, prompting Wayne Atwell, managing director at New York investment bank Casimir Capital, to forecast a test at above $3 if momentum stayed. Just last week, copper was down 20 percent on the year, touching 2.73 a lb, on fear that Europe's debt woes could force a double-dip recession in the United States.
"We don't see a double dip," Goldman's Cohen said. "Certainly that is one argument that some people make."
Goldman has a 12-month growth target of 23 percent for energy prices, 6.0 percent for base metals, 17 percent for precious metals and 4.0 percent on livestock. It is only bearish on agriculture, which it expects to contract by 1.0 percent.
Much of the growth in oil and copper demand was likely to come from the BRIC nations comprising of Brazil, Russia, India and China, Cohen said.
"The growth of the economy in those nations may understate the need for certain commodities like industrial metals," she said. "If you are building new cities, if you are building transportation systems, you need more of these materials than you otherwise would."
As for gold, although the precious metal prices looked frothy after this week' record highs, there was no certainty it wouldn't hit new peaks if the U.S. dollar tumbled, analysts said.
Bullion and U.S. futures of gold hit record highs above $1,250 an ounce earlier this week despite the dollar trading at four-year highs against the euro.
Investors have traditionally regarded gold and the U.S. dollar as interchangeable assets, playing one against the other.
Technical analysts, like Elliott Wave International's President Robert Prechter, told the summit that gold prices could fall as much 40 percent due to bearish technical momentum and deflation related to the euro zone debt crisis.
Yet gold has lost no more than about 2.0 percent since Monday's peaks, settling Thursday's futures trade at $1,222.20 an ounce.
"You could definitely see it go higher," Gina Sanchez, director of asset allocation strategy at New York's Roubini Global Economics, told the summit. "You could see gold become the thing that you shove in your mattress."