Copper and gold should be the commodities that see the biggest benefit once the US Federal Reserve starts to cut interest rates, according to Goldman Sachs Group Inc (NYSE:GS, ETR:GOS).
"The immediate price boost from a Fed driven 100 basis point decline in U.S. 2-year rates is the largest for metals, especially copper (6%), and then gold (3%), followed by oil (3%)," the US bank said in a note.
Copper in London was trading around $8,500 per metric ton early Wednesday, while spot gold was close to a two-week high at $2,025 per ounce.
Soft commodities will be less affected, suggested the bank.
"The positive impact of lower interest rates on both commodity demand and supply makes the commodity price impact ambiguous in theory," Goldman said.
"In practice, we find that the demand boost to prices from a lower cost of carrying inventory and from higher GDP via easier financial conditions dominates."
Rates are widely predicted to start to fall from June onwards.