Goldman (NYSE:GS) Says Precious Metals Will Lead Commodities in 2011

Talking commodities today concerning 2011, Goldman Sachs (NYSE:GS) said they see precious metals leading the way, with gold reaching $1,690 in 12 months, while livestock performing the worst in the commodity sector.

Over the next year, Goldman sees precious metals rising 28 percent and livestock increasing by only 4 percent.

Goldman said in the report, “Extreme weakness in U.S. demand over the past two years has allowed China to grow unconstrained without any competition for raw materials. This is likely to change in 2011 with a stronger U.S. that is likely to bump up against a China that is consuming dramatically more commodities than pre-crisis.”

In order to cut back on American consumption, commodity prices will probably be pushed up in order to “to make room for further Chinese demand,” according to Goldman.

Precious metals specifically identified as being most affected were platinum and copper, and other commodities to be affected said Goldman, will be soybeans, cotton and crude oil.

As far as gold demand and prices, Goldman concluded, “A low U.S. real interest-rate environment will continue in 2011, particularly given the resumption of quantitative easing measures in the U.S.,” the analysts wrote. “However, as we look toward 2012, we find it timely to reiterate our view that at current price levels gold remains a compelling trade, but not a long-term investment.”