Goldman Sachs cut its commodity price forecasts for 2009

According to Reuters, Goldman Sachs slashed its commodity price forecasts, citing a collapse in global economic growth and demand because of the credit crisis. After the bank predicted earlier this year oil prices will reach $200 a barrel, now it expects to see crude average $45 a barrel next year. The intensity of the global credit crunch threatens to push oil prices below $40 a barrel in the near term.

Forecasts for industrial metals aluminum and copper traded on the London Metal Exchange were cut substantially to $1,410 and $2,950 a tone next year from $2,310 and $5,230, respectively.

Meanwhile, Goldman thinks demand for agricultural products will be relatively insulated, even though it has drastically cut forecasts for corn and wheat.

"Expected challenges to acreage expansion in the upcoming planting seasons, suggests less downside from current levels and the potential for a moderate price rebound in late 2009."

Goldman expects investors looking for safety from the financial and economic crisis and a weaker dollar will boost prices of gold and silver. Gold is used by investors as a hedge against financial turbulence and as an alternative currency to the dollar.

Goldman expects economic activity to bottom in the middle of 2009 and a return to year-on-year growth in the fourth quarter of next year.

Related Posts :

Crude oil forecast for 2009

Sources :

Reuters: Goldman slashes 2009 commodity price forecasts, December 12, 2008 9:25am EST

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