Gold has highest potential for near-term price rise, says Goldman Sachs

Brokerage firm Goldman Sachs said in a latest report on Tuesday that gold has the highest potential for a near-term price increase, given its role as a favored hedge against risk. In contrast, weak demand from China has resulted in a "more selective, less optimistic" outlook on other commodities.

"Imminent Fed rate cuts are poised to bring Western capital back into the gold market, a component largely absent of the sharp gold rally observed in the last two years," the brokerage firm said in its note 'Go for Gold'.

Spot gold has surged by 21 per cent this year, repeatedly setting new records and reaching an all-time high of $2,531.60 per ounce on August 20.

The Wall Street bank has revised its gold price target to $2,700 by early 2025, extending its previous forecast of end-2024, due to the price-sensitive market in China.

“We believe that the same price sensitivity also insures against hypothetical large price declines, which would likely reinvigorate Chinese buying,” it added.

Outlook on oil

Goldman Sachs has adopted a more cautious outlook on oil, anticipating a smaller deficit this summer and a slightly larger-than-expected surplus in 2025. Last week, the bank lowered its average 2025 Brent crude forecast and price range by $5 per barrel, citing weak demand from China.

For global gas, the bank has a clear but bearish outlook, expecting European natural gas prices (TTF) to decline due to an upcoming surge in global liquefied natural gas supply capacity.

Goldman also postponed its end-2024 copper target of $12,000 per metric ton to after 2025, acknowledging that the significant copper inventory depletion it had anticipated is likely to occur much later than previously thought. The bank now forecasts an average 2025 copper price of $10,100 per ton, down from its previous estimate of $15,000, citing high refined copper production despite ongoing supply issues in major copper-producing countries.

Additionally, Goldman has taken a more conservative stance on other industrial metals. The bank delayed its previous year-end aluminum target of $2,600 per ton to late 2025, lowering its 2025 forecast to $2,540. The bank also announced it would temporarily halt coverage of zinc while maintaining a bearish outlook on nickel.