Gold is poised to rise above $2,000 an ounce next year, while lack of clarity on demand outlook and policies in China dim prospects for industrial metals, according to Merrill Lynch Wealth Management, which oversees more than $1.8 trillion for clients.
“We are holding gold at the moment,” Bill O’Neill, chief investment officer for Europe, Middle East and Africa, told reporters in London today. “We just use it as a form of diversification, a form of catastrophe insurance, but we are actually looking for a move above $2,000.”
Gold advanced 10 percent to $1,727.78 in London this year, headed for a 12th consecutive annual gain, the longest streak in data compiled by Bloomberg going back to 1920. Prices reached a record $1,921.15 in September 2011.
Global growth will improve slightly next year to 3.2 percent from 3.1 percent, while the U.S. dollar is poised to appreciate, he said. China’s economy will expand 8.1 percent in 2013, compared with 7.7 percent in 2012, while the U.S. growth will slow to 1.5 percent next year from 2.1 percent this year, he said.
Still, a lack of clarity on demand outlook in China, the top metals user, and inventory levels there make it hard to be positive towards industrial commodities, O’Neill said. A stronger dollar may also become a headwind next year, he said.
“We don’t really have a commitment to industrial commodities at the moment,” he said. “This doesn’t necessarily mean we are not going to commit to anything other than gold in 2013, but for now we don’t see this being part of the portfolio.”