Goldman cuts commodities to 'neutral' from 'overweight'

Goldman Sachs on Wednesday said it was shifting its recommendation on commodities to "neutral" from "overweight" on a near-term horizon, as most commodity markets including copper, crude oil and soybeans have reached the brokerage's near-term targets.

Goldman, however, said it remains overweight on a 12-month horizon, with an expected return of 10%.

"We believe that the macro environment is likely to soften in second quarter with few near-term upside catalysts other than increased tensions in the West Asia," Goldman said in a note to clients.

Goldman said it was maintaining its long recommendations on New York Mercantile Exchange crude oil benchmark West Texas Intermediate (WTI) and gold.

"These recommendations are based not on improving fundamentals, but rather on relative value - WTI is expected to converge to Brent as logistical issues are resolved and gold is expected to converge to real interest rates."

The investment bank also reiterated its outlook for gold prices in 2012 and its 3, 6 and 12 month forecasts of $1,785, $1,840 and $1,940 per troy ounce, respectively.

Goldman, however said, the continued strong US economic data poses growing risk to its forecast for rising gold prices.

"We reiterate our view that at current price levels gold remains a compelling trade but not a long-term investment, and we continue to recommend a long position in Dec-12 COMEX gold futures."