Investment bank Goldman Sachs (NYSE:GS) has raised its forecast for returns on commodities this year to 15.5% and said they are the best hedge against inflation.
Goldman Sachs also forecast returns of 6.2% and 15.1% on commodities over three- and six-months respectively on the S&P/GSCI Goldman Sachs Commodity Index (GSCI).
In January, the Wall Street firm had forecast returns of 5.8%, 9.5% and 10.2% on commodities over three-, six- and 12-month periods, respectively. Goldman said it saw a return of 19.3% for energy, 19.1% for industrial metals, 15% for precious metals, 4.8% for agriculture and a negative 0.6% return on livestock over the 12-month period.
Goldman Sachs said commodity demand would be further boosted by redistribution and environmental policies, as well as supply chain initiatives.
The investment bank added that real rates were unlikely to return to pre-crisis levels for a long time due to residual slack in the economy and a dovish tone from the U.S. Federal Reserve on inflation and interest rates.