Goldman calls top of rally in commodities

Marion Dakers
COMMODITY prices dipped yesterday after long-term bull Goldman Sachs advised clients to close their long positions on a basket of commodities including copper, platinum, soy beans and crude oil.

Goldman’s “CCCP basket” has made a 25 per cent gain over the last four months, but the bank warned clients to take profits before an expected cooling of the market.

“Although we believe that on a 12-month horizon the CCCP basket still has upside potential, in the near term risk-reward no longer favours being long the basket,” Goldman’s commodity research team, led by Jeffrey Currie, said in a note.

Crude oil fell from a two and a half year high yesterday, with Brent spot prices closing down 4.4 per cent at $120.83 a barrel in London trading.

Copper prices fell two per cent yesterday while platinum edged down one per cent.

Mining firms were the top fallers in the FTSE 100 after the note’s release, though the sector was also pushed down by a wider flight to safer stocks.

Across the Atlantic, the Dow Jones Industrial Average lost 117.53 points, led by energy stocks, on fears falling oil prices could set off a reversal in the high-flying energy sector

A spokesman for diversified miner Anglo American, which saw its shares fall 4.6 per cent yesterday, said that while metal prices are expected to be unsettled in the near-term, “our view is that demand pace is sufficiently robust and supply sufficiently challenged, with the resources in increasingly difficult geographies” to ensure price rises.

FTSE giants like BHP Billiton, Rio Tinto and Shell reported huge profits for the last year on soaring commodity prices.

Demand from new markets and uncertain long-term supply have recently pushed prices.