The Bloomberg Commodities Index rose for the 11th day in a row on Tuesday, hitting its highest level since 2012. In the view of Goldman Sachs, a well-known Wall Street investment bank, this round of commodity rally may be far from over.
Commodity prices will rise another 13.5 per cent over the next six months with the lifting of global blockades on the novel coronavirus epidemic, a low interest rate environment and a weaker dollar, the Goldman Sachs (Goldman Sachs) commodities research team predicted on Wednesday. Among them, crude oil and gold are likely to rise by double digits.
Goldman Sachs commodities analysts believe that investors should not underestimate the upcoming demand growth, the current supply side is likely to not be able to keep up with demand growth. The spot premium curve structure of many commodities also proves that the market is tightening.
Crude oil
Goldman Sachs' latest estimate is that the price of Brent crude is expected to rise to $80 a barrel in the next six months, in line with its previous estimate. The price of WTI crude oil in the United States will hit 77 US dollars per barrel. As of press time, the two major crude oil futures contracts were trading at $62.94 and $65.88, respectively.
"We expect oil demand to record the biggest increase ever-an increase of 5.2 million barrels per day over the next six months, which will be 50 per cent more than the largest increase in the same period since 2000." Goldman said.
Goldman Sachs also said previously pent-up travel demand would be released as vaccination accelerated in Europe. The bank expects the relaxation of international travel restrictions in May to increase global demand for flight fuel by 1.5 million barrels a day.
Gold
In precious metals, Goldman Sachs expects gold to return to $2000 an ounce over the next six months. The international gold price was last at $1769 in European trading on Wednesday.
Goldman Sachs also said it was too early for Bitcoin to compete with gold for safe-haven demand, and that the two could co-exist. "while Bitcoin is benefiting from greater liquidity, it is plagued by a lack of practical use and low environmental, social and governance (ESG) scores due to high energy consumption," Goldman Sachs said.
The bank added that such large energy consumption made it easy for the cryptocurrency to lose its demand for "value storage" and to be replaced by another competitor with a better design.
Copper
Goldman also raised its copper price forecast, setting a target price of $11000 a tonne for the next 12 months, citing underinvestment on the supply side. Copper for LME delivery was last at $9813 on Wednesday.
"perhaps the only way to solve this record and rapidly approaching supply crisis is to push prices further to record highs," the bank said. "
While China will continue to play an important role in commodity demand, it is not expected to be the only major source of growth over the next decade, the bank added.
