Goldman Sachs still bullish on gold, oil

Gold, which hit a new peak on Friday, has more upside potential and even range-bound oil should rally, Goldman Sachs, one of the most consistently bullish of commodity investment banks, said.

Goldman gave gold a six-month target of $1,300 an ounce. As a non-cyclical commodity, gold has thrived against the backdrop of financial uncertainty and hit a new record above $1,280 an ounce on Friday.

Cyclical commodities, such as oil and copper, have underperformed. Oil has held a range of roughly $70-$85 for more than a year, well below Goldman's three-month target of $92, six-month target of $91 and 12-month target of $101.

 

"We believe that near-to-medium term fundamentals remain most constructive for crude oil, copper, platinum and corn, with short-term risk/reward looking the best for crude oil," Goldman said in a report released on Friday.

"We maintain an overweight recommendation to commodities."

Gold, sometimes used as a substitute currency, has drawn strength from low US interest rates and a weak dollar.

Any resumption of economic stimulus "would likely accelerate the move to our 6-month price target and provide upside risk to our forecasts", Goldman said.

For the more cyclical commodities, strengthening economic data and hints of tightening fundamentals has pushed them higher within their trading ranges and Goldman said it continued to expect them "to break out to the upside in coming months".