(Bloomberg) — China’s increasingly disappointing economic recovery will delay an expected rally in copper, said Goldman Sachs Group Inc. as it slashed its forecast for next year by almost $5,000 a ton.
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The sharp drop in copper inventories that the bank had been anticipating would come much later than previously thought, it said in a note by analysts including Samantha Dart and Daan Struyven. Goldman cut its estimate for the metal to $10,100 a ton for next year, and pushed back its previous end-2024 forecast of $12,000 to post-2025.
The bank also downgraded its 2025 price prediction for aluminum to $2,540 a ton from $2,850. It maintained bearish views on iron ore and nickel, and said gold was its preferred near-term hedge against geopolitical and financial risks.
The change in Goldman’s view comes as inventories of raw materials pile up in China, with economic activity too feeble to clear surpluses. The country’s persistent property downturn, and growing headwinds for its manufacturing and export sectors are making Beijing’s target of 5% annual economic growth look increasingly tough to reach.
“Softer-than-expected China commodity demand, as well as downside risks to China’s forward economic outlook, lead us to a more selective, less constructive tactical view of commodities,” the bank said
Gold stands out as “the commodity where we have the highest confidence in bear-term upside,” Goldman said, as it maintained its $2,700 an ounce target for early 2025. The precious metal will be driven by increased flows from managed money players in the West as the Federal Reserve prepares to cut rates, while ongoing voracious demand from central banks will continue to add support.
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