Goldman Sachs said that base metals will likely benefit from a re-acceleration in Chinese growth and end to de-stocking in Europe this year, spurring prices higher.

The investment bank said that, on a six to 12 month horizon, it is most bullish on copper, which is widely used in manufacturing and construction. Still, it has tempered its 12 month forecast to USD 9,000 a metric tonne from USD 9,500 per tonne citing greater supply availability.

Goldman Sachs said it is meanwhile moderately bullish on aluminum and zinc, which have fallen in recent months to near or below their marginal cost of production, but bearish on nickel. Nickel, it said, is likely to be weighed by expectations of an impending oversupply.

The bank said it expects the price of nickel to fall to USD 18,600 per tonne over the next three to 12 months.

The bank said that still, an end to de-stocking in Europe and re acceleration in Chinese growth [should] result in generally higher base metals prices on a six to 12 month view.

It expects growth of 5% to 10% in Chinese end use markets, including construction, consumer appliances, automotive and power infrastructure, in 2012. Overall, it forecasts Chinese gross domestic product will grow by 8.6% year on year. China is the world's largest consumer of base metals.

Goldman Sachs said that "The key to the metals markets will be closing the 'gap' between the weakness today versus the demand strength expected to be created by both the monetary and fiscal stimulus that is likely to occur in 2012 with the now observed reduction in Chinese inflationary pressures.”

It added that persistent sovereign debt troubles in the euro zone continue, though, to pose the biggest downside risk to metal prices.