Goldman Sachs joins herd of analysts turning bearish on copper

Goldman Sachs has lowered its forecast for the copper price in the coming three months to US$6,700 per tonne from an earlier forecast of $8,650 to reflect waning demand as the global economy heads towards a recession.

Analysts at the investment banking giant had been among the most bullish voices on commodities – and copper in particular – until the recent collapse in prices seen in industrial metals like copper, nickel, aluminium, zinc and tin, as well as in the usual safe haven choices of gold and silver.

In fact, Goldman was predicting a record high copper price just three months ago after it briefly touched $11,000 and copper inventories shrunk to just over 200,000 tonnes – a figure low enough to prompt Goldman into an imminent ‘scarcity episode’ notice.

But the tables have now turned with investors selling the metal in droves and the copper price further falling this week to $7,307 on the Comex market in New York. Goldman even warned that it could have further to run as the US dollar surge and the global energy squeeze continue to threaten economic growth.

“The downward spiral in copper price that has gathered momentum in recent sessions reflects increasingly pessimistic growth expectations,” the bank said in its note.

“This latest leg lower has been tied to increasing headwinds to European growth path, in particular from the impact of surging regional natural gas prices on activity.”

However, Goldman maintained a bullish long-term outlook for copper, stating in the note that it is still on track to reach $15,000 in 2025, based on peaking mine supply and structural high demand.