LONDON (Reuters) - Gold prices hit record highs of $1,110.85 an ounce on Monday as the dollar index weakened to 15-month lows, with last week’s news that the IMF had sold 200 tonnes of gold to India also supporting the market.
Expectations for further dollar weakness and the prospect of inflation and further central bank buying are firmly underpinning the metal, dealers and analysts say.
Silver, platinum and palladium have all been lifted by strength in gold. A recovery in industrial production is likely to be needed to spark significant gains in the more industrial precious metals, however.
Below are forecasts for gold, silver, platinum and palladium prices from major market watchers.
GOLDMAN SACHS (NOV 9)
* Goldman Sachs expects to see gold prices at $960 an ounce on a 3-, 6- and 12-month basis, and silver at $16.00 an ounce in the next 12 months.
* “The ongoing shift of central banks and governments from being net sellers of gold to net buyers in the context of declining real rates have continued to lend support to prices, with risks remaining to the upside despite recent gains,” it said.
* “In addition to this... the continued weakness in real interest rates continues to provide strong support to gold prices over the medium term,” it added.
COMMERZBANK (NOV 9)
* Commerzbank sees gold at an average $1,050 an ounce in the fourth quarter, rising to $1,100 an ounce in Q1 2010 and then declining to $1,000 an ounce in the second quarter of next year.
* It expects silver to average $17.50 an ounce, $18 an ounce and $16 an ounce in the same periods, and sees platinum at $1,300 an ounce in the fourth quarter, $1,200 an ounce in Q1 next year and $1,400 an ounce in the second quarter.
* “The gold purchase by India’s central bank confirms that the new economic powers, in particular, use gold for the diversification of their currency reserves,” it said in a note.
* “We think the current high price level is well supported and have therefore raised our gold price projection for the first quarter 2010 to $1,100 per ounce,” it added.
“However, we do not see significant potential for a price increase beyond this level, as the U.S. dollar is expected to appreciate.”
NATIXIS (NOV 5)
* Natixis predicts that gold will average $925 an ounce in the remainder of 2009, and $943 an ounce in 2009 as a whole. Next year it expects prices to average $850 an ounce.
* “In a very significant development, the IMF announced that it has sold 200 tonnes of gold to the Reserve Bank of India, accounting for almost half of the 403.3 tonnes it is due to sell,” it said. “Who will buy the rest of the IMF’s gold?”
“A Chinese purchase was widely expected by the market, while other central banks such as Russia have been active buyers in recent months. The sale to India certainly suggests that the IMF has willing takers from the central banking community, and may not need to resort to open market sales.”
DEUTSCHE BANK (OCT 23)
* Deutsche Bank said in a note on October 23 that it expects gold prices to average $1,050 an ounce in the fourth quarter, up 10 percent from its previous forecast, and sees the precious metal rising to $1,125 an ounce in the first quarter of 2010.
“We expect gold prices will hit new highs, particularly given the tendency for the U.S. dollar to display seasonal weakness in the last four weeks of the year,” the bank said.
* It also lifted its silver price forecasts more than 10 percent in the fourth quarter to $17.70 an ounce, and by more than 20 percent for the first quarter of 2010 to $18.90.
* It lifted its 2010 gold forecast by more than 30 percent to $1,150 an ounce, and its silver forecast for next year to $20.03 an ounce. It sees platinum at $1,394 in 2010 and palladium at $321.
BANK OF NOVA SCOTIA (OCT 22)
* ScotiaMocatta, the precious metals arm of the Bank of Nova Scotia, said it sees gold in a range of $850-1,400 an ounce in 2010, and silver in a range of $13-25 an ounce.
* “The fact gold prices have broken out to the upside of this consolidation pattern is bullish for gold, but it is also a warning that the market feels there is more trouble for the financial markets in the weeks and months ahead,” it said.
* “Whether this trouble comes in the form of a double-dipped recession, a dollar or bond crisis, or stagflation, inflation or deflation remains to be seen.”
* The bank sees platinum in a range of $1,100-1,900 an ounce next year and palladium in a range of $250-450.
JPMORGAN (OCT 8)
* JPMorgan lifted its gold price forecast to $948 an ounce from $939 in 2009, to $1,006 from $950 in 2010, and to $1,000 from $900 in 2011.
* It also lifted its silver price forecast to $14.30 from $13.90 in 2009, to $15.80 from 13.40 in 2010 and to $15.40 from $10.50 in 2011.
* The bank expects platinum prices to average $1,183 in 2009, rising to $1,338 in 2010 and $1,469 in 2011. It sees palladium at $250 this year, $306 next year, and $425 in 2011.
* “In gold, the gap between traditional demand and gold supply has been filled by investors,” JPMorgan said. “There appears to be no catalyst, other than the time-honored handbrake of positioning, to derail the upward momentum.”
BARCLAYS CAPITAL (OCT 8)
* Barclays Capital expects gold to average $980 an ounce in the fourth quarter of 2009, rising to $1,050 in the first quarter of next year. In the second quarter, it sees gold prices at $1,000 an ounce.
* The bank expects silver to average $14.40 in the last three months of 2009, $15.50 in the first quarter of next year and $14.70 in the second quarter.
* In the fourth quarter 2009, it sees platinum at $1,250 an ounce and palladium at $250. In the first quarter of next year it expects these prices to dip to $1,225 and $245 respectively.
ROYAL BANK OF SCOTLAND (OCT 1)
* RBS sees gold averaging $950 an ounce in 2009, rising to $1,000 an ounce next year. It sees silver at $14.50 an ounce this year and $17.50 an ounce in 2010.
* It sees platinum prices at $1,200 this year, rising to $1,450 in 2010, and palladium at $250 an ounce, rising to $350 next year.
* “While the worst of the banking problems are now deemed to be over, the gold price has continued to rise as investors now turn their attention to the prospect of other risks, particularly the fallout from fiscal imbalances resulting in incipient inflation and the potential for further dollar devaluation,” it said in a note.
SOCIETE GENERALE (SEPT 25)
* SocGen sees gold prices averaging $953 an ounce in 2009, rising to $1,070 an ounce next year. It expects silver to average $13.77 an ounce in 2009 and $15.50 in 2010.
* In the fourth quarter, it sees gold at $1,000 an ounce on average, edging down to $980 in the first quarter and then rising to $1,100 an ounce in the second quarter of next year.
* The bank expects platinum to average $1,216 an ounce and palladium to average $252 an ounce in 2009. Next year it sees those prices rising to $1,250 and $280 an ounce respectively.
Compiled by Jan Harvey; editing by Veronica Brown
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