Goldman Sachs on Monday said metals, particularly copper and aluminum, are set to underperform oil in the near future on subdued global demand growth and a sluggish Chinese economy.
"Around mid-2016 and through 2017, we expect that the oil market will adjust, while metals markets are set to weaken further, particularly copper and aluminum, resulting in substantial downside to metals prices relative to oil over the period," the bank said.
The investment bank cut its average copper price forecast by 8 percent to $4,339 per tonne in 2016 and 11 percent to $4,000 per tonne in 2017, citing current Chinese and global demand weakness and further cost deflation.
Goldman said it continues to see a bearish aluminum market on resilient supply, with prices expected to average $1,414 per tonne in 2016 and $1,350 per tonne in 2017, down from its previous outlook of $1,525 and $1,625 per tonne respectively.
The bank said it expects zinc to "significantly outperform" other metals and raised its outlook for 2016 to $1,713 per tonne from $1,700 per tonne on prospects for a supply deficit due to mine depletions and curtailments.
The top investment bank remains bearish on gold on the possibility of further U.S. rate hikes this year, and expects palladium to outperform platinum over the next 12 months.
(Reporting by Apeksha Nair in Bengaluru; Editing by Tom Hogue)
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