SINGAPORE – Commodity markets will probably stay in a “holding pattern” until there are hard data showing real demand and shrinking stockpiles to support the recent price rally, according to Goldman Sachs Group, which expects such evidence to emerge in the second quarter.

“Market positioning is now extremely long across the commodity complex, as markets have priced in robust expectations on forward demand and inventory draws,” analysts led by Jeff Currie wrote in a report received Wednesday. Investors need to see proof of this outlook, or “in other words, ‘show me the activity’; real demand, real stock draws and empty warehouses,” they wrote.

Raw-material returns measured by the Bloomberg Commodity Index have increased 16% in the past year, led by gains in zinc, sugar and Brent crude, as supplies trailed demand. Goldman said recent survey data suggest global gross domestic product growth is tracking at 4.4%, exceeding its economists’ estimate of 3.6%, and confirmation of “such robust activity” has the potential to push prices above its expectations.

The risks for higher prices are greater in metals markets than oil because of the supply response from US shale producers that’s beginning to gain momentum, the analysts wrote. The “realization of deficit markets” will probably have a much larger impact on term structure, or spot prices relative to forward prices, than on the price levels themselves, they wrote.

“We are confident that real activity and inventory draws are likely to materialize,” the bank said. “In oil, the US will be the last to draw” and global fundamentals suggest a much stronger market than US stockpile increases suggest, it said. In China, the virtuous cycle created by rising producer prices has more to run and strong credit data will boost commodities.

If survey and credit data turn into real demand and deficits, a “backwardated term structure should result,” the bank said, referring to a market where spot prices are higher than forward prices. With such low market volatility, “a positive carry in commodity markets will likely be a welcome change to investors despite only a modest expected change in price levels,” it said.

Goldman reiterated its outlook for crude in New York to rise to $57.50 a barrel in the second quarter before declining to $55 for the rest of the year. Futures traded at $54.23 on Wednesday.