Goldman Sachs: Near-Term ‘Neutral’ On Commodities; Favors Gold, WTI

Goldman Sachs says it maintains its near-term “neutral” recommendation on commodities as downside risks remain high. “In particular, renewed European sovereign-debt concerns on top of a modest slowing in U.S. growth leave us cautious, despite signs that China is beginning to reaccelerate from the policy induced slowdown late last year,” Goldman says.

However, analysts expect tightening fundamentals during the second half and maintain an “overweight” rating on a 12-month horizon. Gold and West Texas Intermediate crude as commodities likely to “stand out,” Goldman adds. “However, we continue to emphasize that these views are based not on improving fundamentals, but rather on relative value–WTI is expected to converge to Brent (crude) as logistical issues begin to resolve with the reversal of the Seaway pipeline and gold is expected to converge to real interest rates as the U.S. economy slows this quarter.”