U.S. investment bank %GoldmanSachs (NYSE: $GS) has withdrawn its recommendation for investors to buy %Copper and lowered its price target on the industrial metal by $5,000 U.S. per ton.
Goldman Sachs now expects copper’s price to be at $10,100 U.S. per ton by the end of 2024. That’s down from a previous forecast that pegged copper’s year-end price at $15,000 U.S.
Analysts at the bank said that higher copper inventories in China and continued weakness within the Chinese property sector were reasons for its lowered price forecast.
Copper’s price had enjoyed a big run higher this year through the end of May on expectations that demand for the metal would rise alongside %ArtificialIntelligence (A.I.) data centres.
However, copper’s price peaked at $10,139.33 U.S. per ton at the end of May. Since then, it has declined 12% to currently trade at $8,971.96 U.S. a ton.
The pullback has come as data shows weakening demand for copper in China, the world’s largest consumer of the industrial metal, with inventory levels growing in the nation of 1.4 billion people.
At the same time, there are signs that investments in A.I. and the data centres that run the models and applications is slowing, further hurting copper prices.
As a result, Goldman Sachs has pulled its open recommendation for investors to buy copper and copper-related stocks and dropped its price target on the metal.
Still, the analysts at Goldman note that copper is expected to benefit from higher demand in coming years as utilities upgrade their electricity grids.
Lower interest rates in coming months could also encourage businesses and governments to invest in infrastructure projects, which could also benefit copper, said Goldman Sachs.
Copper has high thermal and electrical conductivity and is widely used in electrical wiring.
The stock of Goldman Sachs has risen 52% over the past 12 months to currently trade at $487.88 U.S. per share.
