Goldman Sachs' Jeffrey Currie gives CNBC his 2014 outlook on commodities such as gold, copper and oil.
Bad news for "gold-bugs"-bullion's current beginning-of-the-year rally will not only lose steam, but prices could drop sharply by the end of 2014, according to Goldman Sachs' Jeffrey Currie.
Currie, Goldman's head of commodities research, told CNBC on Monday he had an end-of-year price target of $1,050 per ounce for gold, a 16 percent drop based from current prices of $1,251. The main culprit? Economic recovery.
"Our view there really is driven by the expectation of the U.S. economy reaching escape velocity," Currie said on "Squawk on the Street." "Essentially when you think about a short on gold ... it's essentially just a bet on a substantial recovery in the U.S. economy."
(Read more: Gold inches off 1-month high as rally evaporates )
Gold prices ballooned in the years since the 2008 financial crisis, driving prices to record highs thanks to ultra-low interest rates from the Federal Reserve's economic stimulus programs. Prices dropped last year amid fears the Fed would scale down those programs earlier than expected, but a weaker-than-expected December employment report re-ignited interest in gold last week.
Currie said gold still worked as a hedge against inflation; he just doesn't see any strong inflationary pressures in the next few years. He said once the economic recovery picks up more momentum, inflation would follow and gold may become attractive again. Gold's early 2014 rally won't last, he said.
(Read more: 'Lofty' market ripe for at least 10% drop: Goldman )
"I get it all the time-'Why are you bearish on gold when you expect the U.S. economy to recover?'" Currie said. "You have to think about it in different phases of the business cycle."
(Read more: Gold jumps after weak US jobs report )
Other commodities Currie expects to underperform include beans and copper. Currie remains unwilling to make a big bet against oil because of disruptions in Libya and Iran. Investors continued to move away from commodity-intensive emerging markets and into developed economies, a trend that affects most commodities outside gold, he said.
(Read more: Fight in Iraq has oil traders holding their breath )
"They're all driven by the same theme, rotation away from emerging markets and toward developed markets," Currie told CNBC.
-By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."
image: © Bullion Vault