UPDATE: RBS Cuts 2012 Gold Forecast; Sees PGMs Outperforming
May 04 2012 - 06:06AM
Dow Jones News
Royal Bank of Scotland PLC (RBS) Friday reduced its outlook for
gold prices this year, the latest in a line of banks to pare back
their price expectations on the yellow metal amid expectations of a
gradual improvement in macroeconomic conditions.
The bank cut its gold forecast for this year by 1% to $1,725 a
troy ounce, noting the metal's "decent but unremarkable price run"
so far in 2012.
While RBS sees gold peaking at $1,800/oz in the fourth quarter
of this year, it expects gold prices to enter a period of "steady
decline" from then onwards.
"As the road-map to a more normal macroeconomic environment is
in sight and given gold will still be near its historical highs, we
believe that investors will rotate into other asset classes," said
RBS analyst Nick Moore.
Several other banks have also reduced their gold forecasts of
late, including HSBC PLC (HBS) and the National Bank of
Australia.
HSBC cut its 2012 gold price forecast almost 5% less than a week
ago to $1,760/oz, citing weak demand from the Indian jewelry sector
and lower expectations for further economic stimulus measures in
the U.S.
With gold's prominence waning, platinum and palladium should
eventually become the outperformers of the precious metal complex,
said RBS.
"Our forecasts show that while gold and silver still have merit,
the more industrially-driven platinum and palladium could be about
to take up the running," said Moore.
While an expected recovery in the European car market next year
should give platinum a boost, palladium has the "best fundamentals
among the metals," he said.
Although RBS reduced its outlook for palladium prices this year
by 9% to $725/oz, it expects the metal's price to trend upwards
until 2015, "moving into the four-figure territory in 2013 or 2014"
and breaking though its January 2001 all time high of $1,125/oz in
2015.
The bank maintained its 2012 price outlook for platinum at
$1,650/oz.
RBS also reduced its 2012 price forecasts for a range of base
metals, cutting its aluminum outlook 5% to $2,200 a metric ton, its
lead forecast 4% to $2,150/ton, its zinc outlook 2% to $2,050/ton
and its nickel forecast 9% to $19,250/ton.
The only metal that received a price upgrade for this year was
silver, with RBS upping its 2012 price forecast 3% to $33.00/oz.
However, the bank expects silver prices to fall through 2013 to
2015, averaging $20/oz in the second half of 2015.
-By Francesca Freeman, Dow Jones Newswires; +44 (0)20 7842 9412;
francesca.freeman@dowjones.com