The outlook for base metals remains bullish because supplies are low and a continued solid global economic growth will fuel demand for key raw materials, Barclays Capital said Thursday.

"Inventories remain low while we forecast global GDP growth at 4.7% for 2007," Barclays Director of Commodity Research Kevin Norrish said at a media briefing.

Despite signs of a slowing U.S. economy, many metal intensive areas are still "doing well," while infrastructure growth in China will keep levels of raw material demand high, Norrish said.

Fundamental tightness, as shown by aggregate metal stocks being at a record low of five weeks of global consumption, have been fundamental to keeping prices broadly rangebound during this week's oil and gold price tumble, Norrish said.

Oil prices declined below the key psychological level of $60 a barrel while spot gold prices fell to a four-month low of $559.06 a troy ounce.

"We don't believe any money is being taken out of the market from hedge funds or other institutional investors. There is still a high level of investment. What has changed is the way investors access the market," Norrish said, referring to market talk of hedge funds reassessing positions due to losses in other markets.

Barclays has estimated that the total investment in commodities is $120 billion up from $90-$100 billion at the end of 2005.

Investors were increasingly choosing structured notes to circumvent negative roll yield associated with long-only index fund investment vehicles, such as the Goldman Sachs Commodity Index, Norrish said.

"The underlying firm outlook for base metals is dissuading hedge funds from shorting the market despite a concern for a temporary downturn in global growth," he added.