GOLDMAN/COMMODITIES:Commodities priced in financial recovery -Goldman LONDON, Oct 5 (Reuters) - Commodity markets have priced in financial recovery and not economic recovery, but the global economy is at a bottom, Goldman Sachs said on Monday. That is in contrast with the views of many other analysts and fund managers who believe economic recovery started in the second quarter after the worst recession since the 1930s. "Right now, it's as bad as it's going to get. When you are in a trough, markets have no clear direction, which means volatility," said Jeffrey Currie, global head of commodities at the U.S. bank said. "Fiscal stimulus peaked in the third quarter ... (That will) support demand in the fourth quarter." Currie, speaking at a commodities conference organised by Terrapinn, said commodities fell last year because of the economic crisis and not because prices were too high. Crude oil hit a record high above $147 a barrel and copper on the London Metal Exchange touched an all-time high of $8,940 in July of 2008. Prices collapsed in the fourth quarter of last year after the fall of Lehman Brothers ( LEHMQ - news - people ) triggered a sell-off of assets across the board. Signs of economic stabilisation and an anticipated recovery have helped industrial metals to gain 50 percent since the start of April to around $6,000 a tonne. Oil prices too are up about 40 percent to around $70 a barrel. But oil is not pricing in economic recovery, only the improvement in credit markets, Currie said. One delegate at the Commodities Week conference asked Currie if he believed in "peak oil" -- a theory that says oil supply is at or near its peak. "It's a local condition, not a global condition," he said. "If we could invest freely all over the world, we could test the theory, (but) we haven't got to the point where we can find out if it actually applies." (Reporting by Pratima Desai; editing by Anthony Barker)

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