ANALYSTS VIEW-Outlook for precious metals in 2013

Tue Jan 22, 2013 9:41am EST

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LONDON, Jan 22 (Reuters) - Gold could see record average
highs this year and next, but its 12-year long bull run may be
reaching a plateau as gains get smaller on expectations for
monetary policy to stabilise in the United States and other key
economies.
    Palladium is expected to set a record average high this year
and platinum to post its best price performance in two years as
South Africa's supply problems worsen and the economic cycle
starts to favour industrial metals.
    Below are comments from some forecasters of precious metals
prices, on the main factors driving price action next year.
    
    GOLD 
                                AVG 2013      AVG 2014
 Mean                            1788.95        1839.45
 Median                          1775.00        1780.00
 Highest                         2250.00        3000.00
 Lowest                          1587.50        1420.00
 Number of forecasts                  37             33
 
                                                                                                                                                                                                                                                                                                                                                                                                                                                  
    
      
    MICHAEL WIDMER, ANALYST, BANK OF AMERICA-MERRILL LYNCH
    "Real yields, a key gold price driver, have flat-lined
across various tenors, limiting investor appetite for gold.
While large output gaps in advanced nations have generally
prevented a rise of inflation and inflation expectations, a
likely pick-up in growth through the end of 2013 may alter this
pattern, and we maintain our six-month gold price target of
$2,000 an ounce."
    
    NIC BROWN, ANALYST, NATIXIS
    "The debate over the debt ceiling and automatic spending
cuts, which must be finalized by end-February, should give us a
clear indication which path U.S. politicians choose to take;
repay your debt or inflate it away. If the U.S. joins Europe in
fiscal retrenchment, the outlook for gold is poor. If U.S.
fiscal austerity proves either politically unpalatable or
economically impossible, we could be looking at a weaker dollar,
cuts to U.S. credit ratings and potentially significantly higher
gold prices."
    
    ALEXANDRA KNIGHT, ECONOMIST, NATIONAL AUSTRALIA BANK
    "Abstracting from some near-term volatility, we expect the
price of gold to ease further as the recovery in the U.S.
economy gains momentum and its currency strengthens, shifting
demand away from alternative investments, such as gold, and
towards currency-based investments and equities. While a
strengthening U.S. economy will place upwards pressure on
inflation, which gold has traditionally been used to hedge
against, increased demand from this source is unlikely to have a
significant impact on price."
    
    SUBHRASOM DE, ANALYST, KCTL RESEARCH
    "The Fed is selling short-term bonds and with the proceeds
longer-term bonds are bought. Thus, the Fed is pushing prices up
for long-term bonds by lowering the yield. So, in a lower
interest rate scenario and with high inflation expectations, the
real return would be negative. This should weigh down on dollar
which would be supportive for gold."
    
    SILVER            
                                 AVG 2013       AVG 2014
 Mean                               34.01          37.50
 Median                             32.85          33.50
 Highest                            65.00         150.00
 Lowest                             26.75          25.25
 Number of forecasts                   34             30
 
    JONI TEVES, ANALYST, UBS
    "Ultimately it is still the vote of confidence coming from
investors that will have the more powerful impact on the silver
market. More work needs to be done to encourage market
participants to become more active in silver again - less
violent price action and/or a stronger price uptrend are likely
to attract flows. We have held the view that silver is poised to
outperform in a QE environment which is friendly towards risk
assets."
    
    ANDREA ARATOLI, ANALYST, ITALPREZIOSI
    "Concerning silver, the macroeconomic picture is important
although (it) has become much more important to monitor the
investment demand. It could be the only driver that can fill the
gap of the surplus of production."
    
    PLATINUM           
                                  AVG 2013      AVG 2014
 Mean                              1722.59       1831.64
 Median                            1700.00       1800.00
 Highest                           1995.00       2400.00
 Lowest                            1518.75       1400.00
 Number of forecasts                    27            25
  
    ANNE-LAURE TREMBLAY, ANALYST, BNP PARIBAS
    "Platinum's demand remains affected by the poor state of the
European auto sector. However, the ongoing issues surrounding
platinum mine supply in South Africa should counterbalance
weakness in demand. Overall, we expect the metal's fundamentals
to improve in 2013, which will be supportive of a higher price."
    
    ROBIN BHAR, ANALYST, SOCIETE GENERALE
    "The disruption in the South African mining sector will have
long-term ramifications. Improved economic expectations and
possible further disruption to mine production could well mean
that, after ETF investment, the metal will be in balance or a
small deficit for the longer-term."

    DANIEL BREBNER, ANALYST, DEUTSCHE BANK
    "Certainly for platinum the South African situation looks
like it's likely to continue creating uncertainty with respect
to supply. We have got some proposed cutbacks... but the
government is taking a different view on that, and will likely
try to encourage companies to maintain relatively higher levels
of output. That tussle will determine to a degree how platinum
performs."
    
    PALLADIUM              
                                    AVG 2013    AVG 2014
 Mean                                 753.59      842.18
 Median                               745.00      820.00
 Highest                              850.00     1010.00
 Lowest                               646.25      610.00
 Number of forecasts                      26          24
    
    JAMES STEEL, ANALYST, HSBC
    "Palladium prices will be sensitive to any evidence of
diminished Russian exports. Although there is no public
information on the subject, Russian stockpiles are perceived to
be dwindling. PGM ETFs registered gains in 2012 and further
investor interest in 2013 may tighten underlying supply/demand
balances, thereby buoying prices."
    
    DAVID JOLLIE, ANALYST, MITSUI PRECIOUS METALS
    "The fact that the U.S. government managed to avoid the
worst damage from the self-imposed fiscal cliff deadlines leads
us to be somewhat optimistic over North American demand for
palladium. The Chinese economy should start to rebound and suck
up more palladium for its automotive industry too."

 (Reporting by Jan Harvey; Editing by Veronica Brown and Alison
Birrane)
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