Copper prices have surged more than 27 percent since the start of the year and “the gains are justified,” Goldman Sachs (NYSE:GS) says.

The red metal has been trading above the $7,000-per-tonne mark since last week, supported by a weaker US dollar and investors’ optimism about global growth prospects.

Analysts at the investment bank, previously one of the most bearish voices in the space, said the markets “have not fully appreciated the synchronized nature of global growth and reduced downside risks from China.”

“We believe the current level of copper prices is largely justified by strong and synchronous global growth, the US dollar depreciating and repeated disappointments in copper mine supply,” Goldman analyst Hui Shan said.

As a result, the bank upped its forecast for copper to average $6,750 per tonne in the near term, up from $6,200. Goldman also raised its average 12-month target to $7,050 from $5,500.

“Combining our supply and demand balance forecast with our forward views on growth and currencies, we believe the 2011-2016 surplus market is over and copper is poised to go higher, with the potential to surpass $8,000” by 2020,” analysts said.

The Wall Street bank also reviewed its deficit forecast for the market, estimating a shortage of 130,000 tonnes in 2018, as strong global growth helps boost demand. Goldman had previously estimated a surplus of 150,000 tonnes for the same period.

Other market participants are also bullish on copper for the rest of the year, such as Vertical Research Partners’ Michael Dudas, who recently told CNBC that the fundamentals on copper medium to longer term look “very supportive.”

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