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Article, this time from Goldman Sachs

Goldman Sachs Likes Zinc, Lead, Sees Risks To Copper, Gold, Soybeans
Friday October 18, 2013 8:14 AM

Goldman Sachs sees upside potential for zinc and lead but potential downside risk for copper, gold and soybeans. However, the firm also says it would wait for clarity on tapering of U.S. quantitative easing before shorting certain commodities. The debt-ceiling limit was only extended by a few months this week, prompting ideas that the lack of a lasting resolution means that QE will be extended. “Although we maintain our neutral recommendation for commodities and our expectations for (a) mostly flat S&P GSCI returns over the next 12 months, we see significant downside opportunities in copper, gold and soybeans,” Goldman says. “However, the lack of a lasting resolution gives us near-term pause until we have more clarity on the risks around deferred tapering. On the upside, we like zinc and lead due to long-awaited mine closures and the lack of cost deflation that drives the other metals. Finally, we see very modest upside in energy driven by a positive carry in Brent…and a supply-driven rebound in natural gas prices.” As for gold, Goldman said it expects the metal to trade close to its near-term target of $1,300 until the end of the year. However, a more optimistic outlook for the U.S. economy in 2014 is likely to drive expectations for QE tapering that pressures gold, says Goldman, adding that it maintains its end-of-2014 target of $1,050 an ounce.