Most unusual for Goldman Sachs to issue a positive call on commodities one day prior to options expiry. Hence, the usual NY gold and silver suppressors have been given the day off in support of GS's call. Generally, only negative propaganda is spewed before options expiry. No doubt they must have something up their sleeve for this month.
Regards - VHF
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Commodities Gain as Goldman Advises Buying
Stephen Kirkland - Bloomberg
May 24, 2011
Commodities rallied, helping global stocks rebound from the biggest drop in two months, after Goldman Sachs Group Inc. said it’s turning “more bullish” on raw materials. Benchmark government bonds declined.
Oil advanced 1.8 percent and gasoline surged 2.7 percent at 10:05 a.m. in New York. The MSCI All-Country World Index rose 0.5 percent after tumbling 1.8 percent yesterday, and the Standard & Poor’s 500 Index increased 0.3 percent. The euro strengthened 0.4 percent to $1.4102. Germany’s 10-year bund yield added four basis points to 3.05 percent and 10-year Treasury note yields increased one basis point to 3.14 percent.
The S&P GSCI Index of 24 commodities recouped most of yesterday’s 1.7 percent slump as Goldman Sachs suggested buying oil, copper and zinc, reversing last month’s call to sell commodities, while Morgan Stanley raised its forecast for Brent crude by 20 percent. Greece endorsed an asset-sale plan and 6 billion euros ($8.4 billion) of budget cuts to win extra aid, while European Central Bank council member Christian Noyer said a restructuring of Greek debt would be a “horror story.”
“The risk/reward once again favors being long commodities,” Jeffrey Currie, head of commodities research at Goldman Sachs in London, wrote in an e-mailed report today. “Economic growth will likely be sufficient to tighten key supply-constrained markets in the second half, leading to higher prices.”
Commodity Rally
Silver, sugar and gasoline climbed more than 2.6 percent to lead an advance in 19 of 24 materials tracked by the S&P GSCI index. Oil gained 1.8 percent to $99.48 a barrel in New York and Brent crude climbed 2.1 percent to $112.46 in London. Goldman, which correctly advised investors to sell crude oil and copper last month before a price slump, raised its 12-month prediction for Brent crude to $130 a barrel from $107.
The S&P 500 rebounded from the lowest level in a month. Alcoa Inc., the largest U.S. aluminum producer, rose 0.9 percent. LinkedIn Corp. slipped 1.6 percent as investors including Lawrence Haverty of Gamco Investors Inc. said the hottest initial public offering in the U.S. since at least 2006 may not be growing fast enough to justify its valuation.
