Goldman Sachs' latest thoughts on.......>

COMMODITIES: Goldman Sachs' latest thoughts on commodities highlights:

- It is tempting to think the worst is behind us for commodities however markets

must clear current supply and demand, which remain extremely out of balance.

- Sees markets as entering the inflection phase where rebalancing has started,

but this could take 4-8 weeks to resolve before the argument for a market bottom

can be made. GS expect oil to test global storage capacity in the next 3-4 weeks

which will likely create substantial volatility with more spikes to the downside

until supply finally equals demand.

- GS see metals as having gotten ahead of themselves as Chinese exports are

likely to decline in May, with ex-China stocks set to rise sharply due to

ex-China demand losses and mines shuttered in March that are planning to reopen

in May. This suggests metals are poised for a substantial sell-off. 

- With commodities already down 39% ytd and 50% yoy, concerns around deflation

are rising, but GS do not see this as bringing the gold rally into question as

real interest rates likely to stay negative for some time in major DMs

supporting high investment demand for gold.