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26
November 2018
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G20 meeting (The
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Goldman Sachs said on Monday
the G20 meeting this week could be a catalyst for a rebound in commodities
prices, possibly prompting a thaw in U.S.-China trade tensions and offering
greater clarity on a potential OPEC oil curb.
“Given the size of dislocations in commodity
pricing relative to fundamentals, with oil now having joined metals in pricing
below cost support, we believe commodities offer an extremely attractive entry
point for longs in oil, gold and base (metals),” the bank said in a note.
Leaders of the G20 industrialized nations
meet in Argentina this week and are set to discuss U.S. foreign policy, climate
policy, an OPEC cut, and the China-U.S. relationship. The
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Goldman believes the Organization of
Petroleum Exporting Countries and other nations will come to an agreement,
leading to a recovery in Brent prices.
Oil prices limped higher on Monday after
Friday’s 7 percent rout.
“While we didn’t think that Brent prices were
justified at $86 per barrel, neither do we believe that they are at $59/bbl
with our 2019 Brent forecast at $70/bbl,” Goldman said. The
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Oil demand growth is likely to “remain
resilient,” at 1.6 and 1.5 million barrels per day this year and next, while
Iranian exports could decline through 2019, Goldman said. The
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The Wall Street bank retained its
“overweight” recommendation on commodities and forecast 3-month, 6-month and
12-month returns on the S&P GSCI commodities index at 19.5 percent, 17.3
percent, and 17.2 percent, respectively.
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In precious metals, the bank noted the “best
way to trade dislocation created by excessive U.S. optimism is via gold.” The Total Investment & Insurance
Solutions
Gold prices declined more than 10 percent
from a peak in April as investors opted for the safety of the dollar amid the
U.S.-China trade war and rising U.S. interest rates. The
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Goldman recommended going long on palladium
at $1,119 per troy ounce and shorting platinum at $840 per troy ounce,
reasoning it would take several years to adopt a more platinum-heavy
autocatalyst.The Total Investment &
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