Lead will have the biggest gains among industrial metals this year and gold prices will start to decline on mounting confidence the global economy is recovering, Natixis Commodity Markets Ltd. said.
Lead will average $2,575 a metric ton this year, 24 percent higher than in 2012, Natixis said in a report today. Copper’s average price will rise 6.9 percent to $8,500 a ton, aluminum will gain 3.6 percent to $2,125 a ton, nickel will increase 6.6 percent to $18,750 a ton and zinc will advance 9.4 percent to $2,150 a ton, it predicts.
Global equities reached a 21-month high this week and commodities climbed last week to the highest since September after China’s expansion accelerated for the first time in two years and the Federal Reserve signaled it will maintain its stimulus program to sustain a recovery. The International Monetary Fund predicts global growth will climb to 3.5 percent this year from 3.2 percent in 2012, even as it sees a second year of contraction in the euro area.
“Chinese growth is improving,” Natixis wrote in the report. “Europe is expected to be past the worst in its fiscal crisis, even if another year of economic contraction is likely. The Fed is expected to be able to support growth in the U.S.”
Gold dropped the past four months, the worst run since May. The Fed said Jan. 30 it will continue to buy securities at the rate of $85 billion a month, even after minutes released Jan. 3 showed some policy makers favored ending $85 billion in monthly bond purchases this year. Platinum and palladium prices rallied this year on concern mine closures in South Africa, the biggest platinum producer, will curb supplies.
“The potential removal of QE3 now represents a significant downside risk for gold,” Natixis said, referring to the Fed’s third round of quantitative easing. “South African platinum producers are taking a very careful look at their continuing participation in both the platinum industry and the South African economy, and platinum prices are responding to an anticipated reduction in output as a result.”
Gold averaged a record $1,669 an ounce last year. The figure will fall to $1,625 this year and $1,500 next year, Natixis said. It sees silver at $29.50 an ounce this year, after averaging $31.17 in 2012. Platinum averaged $1,552 an ounce last year and will rise to $1,720 this year. Palladium will climb to an average of $750 an ounce this year, after averaging $644 in 2012.