Nov. 18 (Reuters) – Goldman Sachs on Wednesday maintained its recommendations to “ overweight ” commodities in 2021, believing that the sector may be the best hedge against likely inflation and is preparing for another bull market.
The bank expects a return of around 27% over a 12-month period on the S & P / Goldman Sachs Commodity Index (GSCI), with a return of 19.2% for precious metals, 40.1% for l energy, 3% for industrial metals and a negative 1. % return on agriculture.
The bank has kept its 3, 6 and 12 month targets for gold and silver at $ 2,300 and $ 30 an ounce respectively because it believes short-term inflation has more wiggle room, while that an increase in solar installations supports the demand for money.
“In metals, we have seen a sharp decline in maintenance investments and supply disruptions extend into 2021. This suggests that while demand weakens in the coming weeks as winter exacerbates the COVID, markets will likely continue to rebalance, barring an outright collapse in demand, ”Goldman Sachs said in a note.
The bank said base metals and agriculture have more short-term advantages than oil in picking up demand in China.
Last week, Goldman lowered its Brent price forecast for 2021, but said a surge in COVID-19 cases in Europe and the United States was just a ‘slowdown’ before a potential vaccine and continued reductions in supply from major producers only tighten market fundamentals. (Reporting by Sumita Layek and Arpan Varghese in Bengaluru; Editing by Mark Potter)