Powerful US investment bank Goldman Sachs has released its market predictions for the coming year. Investors can expect a good return if they want to invest in commodities.

Goldman publishes its Global Markets Outlook every autumn, which refers to the following year. The study gives an overview of expected economic development, unemployment and interest rate changes. These predictions serve to identify return opportunities for certain markets. The annual Global Markets Outlook from Goldman Sachs is one of the most prestigious investment studies in the world and has a huge influence on the strategies of many (private and institutional) investors.

Goldman Sachs recommends commodity investments In short: In the latest study, Goldman Sachs recommends investors to significantly increase their commodity engagements for the coming year – to go „long“. The analysts expect an end to monetary tightening. In other words, according to Goldman Sachs, central banks will not increase interest rates next year, but rather reduce them again. This would improve the investment environment in the economy, which would also benefit the demand for commodities.

Many manufacturers have worked their way through their raw material stocks over much of the current year due to higher interest rates, but also due to the enormous inflation. This kept the demand for commodities in check. Goldman Sachs now expects this phase to end in early 2024.

Oil price 2024: what the analysts say For Brent crude oil, the gold men predict an average price of 92 US dollars. For comparison: On Tuesday morning, the fossil fuel was trading at 82.69 dollars per barrel of Brent (as of 14.11.2023, 9:00 a.m.). Goldman Sachs therefore expects an average price increase of 11.25 percent.

On the one hand, the experts expect the countries of the OPEC + to maintain their production cuts. At the same time, other producers are expected to increase their output, which would prevent the oil price from increasing even more in 2024. For the demand for crude oil, Goldman sees positive impulses due to the expected economic recovery. The experts particularly see potential for return in the refinery business. There remains a low supply compared to the demand. This would also benefit companies such as Shell or Exxon Mobil.

Industrial metals 2024: strong opportunities for copper and aluminium The Goldman analysts also show a bullish attitude towards industrial metals. Below you can see the 2023 development of the copper price using an ETC:

Source: www.aktienscreener.com

It is clearly visible that the market price shot up at the beginning of the year, but then declined significantly again. As an industrial metal, copper is heavily dependent on the global economic development. This put pressure on the price development in 2023.

Goldman Sachs now expects a clear turnaround in 2024. For copper, the market price is expected to increase by an average of 25 percent. According to the experts, there are two important reasons for this.

First, the economic recovery in major economies will drive demand for copper, while the supply will be limited, according to Goldman Sachs.

Second, copper is an important raw material for the energy transition – for example for electric cars, wind farms and solar panels. The experts expect an increase in the global decarbonisation trend in 2024 and the following years, which would make copper sustainably more valuable.

The gold men also predict considerable price impulses for aluminium. The material is important to make electric cars lighter, which reduces their energy consumption and thus increases their range. Here Goldman expects an average price increase of 12 percent in 2024.

If you want to invest in copper and aluminium, you can invest in the stocks of Rio Tinto, BHP and Glencore, among others.

Geopolitical conflicts: commodities as a hedge Interesting: Goldman Sachs also referred to the basic potential of commodities as a hedging instrument in the new study. The experts are primarily referring to the tensions in Eastern Europe, the Middle East and Far East.

Although the analysts initially expect no major escalation, such as a blockade of the Strait of Hormuz, which is an important trade route between the Persian Gulf and the Indian Ocean. Nevertheless, there is a risk of interruption of the supply of raw materials, according to Goldman. This alone supports commodity prices.

My conclusion for you 2024 could be a profitable year for you as a commodity investor. The new forecasts from Goldman Sachs certainly support this fantasy.

However, take into account that the raw materials sector is highly dependent on the macroeconomic environment and remains so. So continue to pay close attention to global economic development and the actions of central banks.