Hey long! Go long with HGD! Goldman Predicts Significant Losses for Gold, Iron Ore in 2014
By Jake Lloyd-Smith - Nov 20, 2013 7:03 PM ET
Iron ore, gold, soybeans and copper will probably drop at least 15 percent next year as commodities face increased downside risks even as economic growth in the U.S. accelerates, according to Goldman Sachs Group Inc.
The risks are strongest for iron ore, and follow increases in supplies, analysts including Jeffrey Currie wrote in a report yesterday that identified the New York-based bank’s top 10 market themes for the coming year. The price pressures will mostly become visible later in 2014, the analysts wrote.
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Nov. 20 (Bloomberg) -- Bloomberg's Alix Steel and Bloomberg Industries’ Ken Hoffman, put futures in focus with a look at the disparity between equity markets and copper prices in "On The Markets." They speak on Bloomberg Television's "In The Loop."
Commodities as tracked by the Standard & Poor’s GSCI Index lost 5 percent this year, led by declines in corn, as supplies rose, and precious metals, on expectations the Federal Reserve will taper stimulus. Goldman described the forecast losses for iron ore, gold, soybeans and copper as significant, and said that they could help weaken currencies in producing countries, including the Australian dollar and South African rand.
“Last year, we pointed to the ongoing shift in our commodity views, ultimately towards downside price risk,” the analysts including Currie wrote. “The impact of supply responses to the period of extraordinary price pressure continues to flow through the system.”
Gold, which was at $1,244.80 an ounce on the Comex at 7:37 a.m. in Singapore, is forecast to drop $1,050 at the end of next year, the report said. This year, bullion is headed for the first annual drop since 2000 as investors pared holdings.
Soybeans are seen at $9.50 a bushel over the period, from yesterday’s close of $12.7375 in Chicago. Copper will drop to $6,200 a ton, compared with yesterday’s close of $6,996 on the London Metal Exchange.
To contact the reporter on this story: Jake Lloyd-Smith in Singapore at jlloydsmith@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net