Goldman Sachs said Monday commodities could surge around 17 percent over the coming months, with a fast-approaching G-20meeting cited as a potential launchpad for raw materials.
So far this month, oil prices have collapsed on intensifying oversupply concerns, metals have fallen amid worries over slowing economic growth and investors continue to fret about the ongoing trade war between the world's two largest economies.
"Given the size of dislocations in commodity pricing relative to fundamentals with oil now having joined metals in pricing below cost support, we believe commodities offer an extremely attractive entry point for longs in oil, gold and base," Analysts at Goldman Sachs said in a research report published Monday.
'Greater clarity on a potential OPEC cut'
At the end of the week, President Donald Trump and Chinese premier Xi Jinping are expected to meet on the side-lines of a G-20summit in Argentina.
The meeting offers a chance for the two global leaders to address their trade dispute, while Russia's Vladimir Putin will have an opportunity to discuss crude policy with Saudi Arabia's Crown Prince Mohammed bin Salman.
"Many of the political uncertainties weighing on commodity markets have a significant chance of being addressed in Buenos Aires," Analysts, including Jeffrey Currie, said in the report.
"This includes some improvement on the China-U.S. relationship and like in the 2016 G-20 meetings, some greater clarity on a potential OPEC cut," they added.
Gold
Meanwhile, gold prices rose slightly on Monday, as the U.S. dollar weakened and the future course for Britain's departure from the European Union provided support for the yellow metal.
"If U.S. growth slows down next year, as expected, gold would benefit from higher demand for defensive assets," Goldman said in the note.
Reference: CNBC
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