Goldman raises 12-month commodities returns forecast to 15.5%
Goldman Sachs Commodities Research has raised its forecast for returns on commodities to 15.5% over the subsequent 12 months and said they remained one of the best inflation hedge.
The Wall Street bank also forecast returns of 6.2% and 15.1% on commodities over three- and six-months respectively on the S&P/GSCI Goldman Sachs Commodity Index (GSCI) in a notice dated Monday.
Spot-priced commodities have benefited from higher-than-anticipated economic activity as it has created sharp deficits regardless of the growth rate, Goldman said.
In January, the bank had forecast returns of 5.8%, 9.5% and 10.2% on commodities over three-, six- and 12-month periods, respectively.
Goldman mentioned it saw a return of 19.3% for vitality, 19.1% for industrial metals, 15% for valuable metals, 4.8% for agriculture and a unfavorable 0.6% return on livestock over the 12-month period.
It said the pandemic represented a structural shift in the way governments interact with the economic system and commodity demand would be further boosted by redistributional and environmental policies, as well as supply chain initiatives.
“Diversification out of fixed income into gold can continue, especially if the focus around inflation overshoot risks increases,” it said.
The bank added real rates were unlikely to return to pre-crisis levels for a long time due to residual slack in the economic system and a dovish change in the reaction function of the Federal Reserve.