(Kitco News) - Commodities that are cyclical in nature, such as copper and crude oil, may be among those that will post strong performances in 2011, Goldman Sachs said in its 2011 commodities outlook released Monday.

In 2010, commodity returns were driven almost entirely by non-cyclical commodities such as gold and agriculture that were up by over 20%, Goldman said. However, a shift toward cyclical commodities is already under way, led by copper over the last several months and more recently by oil, Goldman said.

“We believe this shift towards cyclical commodities will continue into 2011 as structural supply issues re-emerge with the U.S. recovery on more solid footing,” Goldman said.

Weakness in U.S. demand over the past two years enabled China to grow without competition for raw materials. But this is likely to change in 2011, with the U.S. and China both seeking commodities, resulting in “resource alignment,” likely leading to higher prices to slow U.S. demand enough to make room for further Chinese demand, Goldman said.

“The markets we expect this to impact most are those that China is extremely short and that are still very supply constrained: crude oil, copper, cotton/soybeans and platinum,” Goldman said.

The Goldman report listed a 12-month forecast of $105 a barrel for West Texas Intermediate oil and $11,000 per metric ton for copper. Gold is forecast at $1,690 and silver at $28.20 in 12 months. For other base metals, Goldman listed 12-month forecasts of $2,200 a ton for aluminum, $19,500 for nickel and $3,100 for zinc.

Goldman raised its 12-month returns forecast for the S&P GSCI Enhanced Total Return Index to 18% from 16.2%, driven mainly by changes to the investment bank’s agriculture forecasts. “We continue to recommend an Overweight allocation to commodities,” Goldman said.

As for base metals, some of the structural uncertainties are fading, with the U.S. economy likely to be on “more solid footing” and European sovereign-debt issues “beginning to be resolved.” Developed markets are likely to add to the global demand growth, Goldman said.

“This cyclical differentiation in pricing is already under way, with copper substantially outperforming aluminum since early November, and our rank ordering by metal is copper, zinc, aluminum and nickel,” Goldman said. “The reason aluminum moved ahead of nickel is the supply disruptions in nickel are reversing, while a more confident consumer and higher energy prices should favor aluminum.”

Goldman described base metals are closer to a “structural bull market” than energy. In oil, there is potential for a two stages--one in which inventories decline, followed by OPEC bringing more capacity on line. But many metals markets are already producing at full capacity, with current inventories essentially the only “spare capacity” available.

“This suggests that metals are likely to reach a structural bull market sooner than energies, as once inventories are exhausted, demand will have to do all of the adjustment, which will require higher and more volatile metal prices,” Goldman said.

As it has previously, Goldman said it looks for gold to continue rallying in 2011 but to perhaps peak in 2012.

“We expect that a low U.S. real interest-rate environment will continue in 2011, particularly given the resumption of quantitative easing measures in the U.S.,” Goldman said in listing its 12-month target of $1,690 and a 2011 average of $1,575.

The investment bank said it anticipates that U.S. real rates will begin to rise in 2011. Thus, whereas Goldman has a 2012 average gold price forecast of $1,700 and sees a peak near $1,750, “we think it is prudent for gold investors to begin to prepare for gold prices to peak in 2012.”

The investment bank added: “We also expect that recovering global automobile demand will likely continue to put upward pressure on auto-catalyst demand and therefore on platinum and palladium prices.”