Goldman raises outlook on commodities, forecasts 15% return over next 12 months

Goldman raises outlook on commodities, forecasts 15% return over next 12 months

Goldman Sachs is raising its outlook for the commodities sector over the next year as the economy's recovery gathers strength.

Strong fundamentals and supply constraints are boosting commodities as demand continues to recover, the bank found. The sector is a beneficiary of the "reflation trade," which involves assets that are expected to fare well in a period of economic growth.

The firm recently lifted its oil, metal and grain forecasts, and now expects the commodities sector to return 15.5% over the next 12 months. This is on top of the group's 15% gain this year, making it the best-performing asset class by a "long shot," according to Goldman.