Goldman Sachs Group Inc. has significantly revised its copper price forecast for next year, citing China’s ongoing economic challenges as a key factor.
The investment bank now predicts copper prices will average $10,100 per ton in 2025, a substantial decrease from its previous forecast of $12,000.
This adjustment reflects a delayed expectation for a recovery in copper prices, impacted by China’s sluggish economic rebound and its growing inventory of raw materials.
Goldman Sachs cuts copper forecast
Goldman Sachs has lowered its copper price forecast for next year by almost $5,000 per ton, from $12,000 to $10,100.
This reduction is attributed to China’s weaker-than-expected economic recovery, which has led to an accumulation of copper inventories that the bank anticipated would deplete sooner.
The delay in inventory reduction means that the anticipated rally in copper prices will be postponed.
In a note by analysts Samantha Dart and Daan Struyven, Goldman Sachs indicated that the expected drop in copper inventories is now anticipated to occur much later than previously thought.
The shift in outlook is a result of China’s persistent property downturn and ongoing difficulties in its manufacturing and export sectors, which have weakened demand for commodities.
China’s economic struggles
China’s economic performance has continued to disappoint, with weak activity levels failing to clear the surplus of raw materials.
The country’s property sector remains in decline, and challenges in the manufacturing and export industries are making it increasingly difficult for Beijing to achieve its 5% annual growth target.
As a result, Goldman Sachs has revised its forecasts for several metals beyond copper.
The bank has also downgraded its 2025 price forecast for aluminum to $2,540 per ton, down from $2,850. This reflects broader concerns about the state of global commodity markets and the specific issues facing China’s economy.
Goldman Sachs maintains bearish stance on iron ore and nickel
While adjusting its copper and aluminum forecasts, Goldman Sachs has maintained a cautious outlook on iron ore and nickel.
The bank’s view on these commodities remains bearish, reflecting ongoing challenges and uncertainties in the global market.
Goldman Sachs has highlighted gold as a key exception, maintaining a positive near-term outlook for the precious metal.
The bank’s target for gold remains at $2,700 per ounce for early 2025, driven by strong demand from central banks and anticipated interest rate cuts by the Federal Reserve.
Gold as a preferred hedge amid economic uncertainty
Goldman Sachs continues to see gold as the most promising commodity in the near term.
The bank anticipates increased investment flows into gold from managed money players in the West, alongside persistent central bank demand.
This support is expected to help gold maintain its value and provide a hedge against geopolitical and financial risks.
The investment bank’s revised forecasts underscore a more selective approach to commodities, driven by the challenges in China’s economic recovery and the broader implications for global markets.
While copper and aluminum face downward revisions, gold remains a strategic asset with strong near-term potential.
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