Gold Outlook Predicated on U.S. Data: Currie

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Nov. 07 (Bloomberg) -- Jeffrey Currie, Head of Commodities Research and Partner at Goldman Sachs, discusses his outlook for commodities. He speaks on Bloomberg Television’s “On The Move.” (Source: Bloomberg)

Tapering predicates what happens to the dollar.

I want to get a sense from you, are we just too excited that we're going to see taper pushed out further and sfwurte 2014? -- further into 20 2014? i think it is important to distinguish the direct versus the indirect.

The ones that have a direct impact would be the precious metals and not the industrial metals.

Your concern about too much optimism was priced in immediately after the government shut down.

We saw a modest rally.

Most of that has been given back with some improvement in economic data.

As we look forward, we see that the outlook for gold is primarily predicated on the u.s. economic data.

If we continue to see improved data there, we would expect to see further downside risk in gold prices.

However we don't see the real downside risk materializing until the first quarter of next year.

Let's talk about -- if it is growth and risk, give me your vee view, jeff, in terms of shutdown, the impact.

Your outlook for 2014 g.d.p. in the u.s. and then finally, if it is not too much, give me your gold target.

We have a target at the end of next year at 10.50. further growth implies for tapering and the reversal to have money and easing policy that has been put in place.

I want to emphasize that that is a view for gold denominated in u.s. dollars.

If you were to denominate it in euro or yen, it would be a different story because they don't have the same type of pressures.

Let's talk about china.

China is having its third -- all about strategy for china.

You know, base metals.

Commodities, absolutely linked to what happens in china and growth.

What is your view for this weekend?

What is your view on china and how does that play into your global commodity playing?

Well, i think again, it is important to distinguish between cyclical dynamics in china and structural.

Sickically we're more positive than what we were earlier in the year and at the end of last year.

That is going to be supported.

There is a structural story overlaying us.

We look at the demand growth for many commodities, particularly copper, iron other and some others, infrastructure-related commodities, we see a slowing in the demand growth as well as oil.

Are we going to return to the demand we saw in 2009 and 2010? unlikely.

We expect china to deliver demand growth, but not at the same rate it was in the last two to three years before 2012. take me inside.

You're thinking on iron other.

If we look at iron ore.

It is so important in terms of my equity investing into some of the miners and the perception of where that commodity goes.

Do i sustain around this $130 or is it going to be a struggle?

We argue it is going to be a struggle.

It is coming from unsubsubstantiate rble increases in supply.

It is a similar story that we see in copper as well.

After the very high prices that we saw over the previous decade, substantial ininvestments in capacity, this capacity is likely to materialize in significant growth and supplies.

To give you some numbers r particularly in copper.

Trend supply growth was expected to be 2.5% over the last decade.

We see that accelerating up to 8%. our call for weaker iron ore prices and copper prices is not being depriven by so much a weak china but increases in supply.

It is interesting that you note when you talk about the supply factor.

That is going to put a cap on copper for me and take me lower there.

When we go over and have a look at aluminum again, you're critical in terms of the lack of response taking capacity out of system and that will weigh on your aluminum call.

Yeah.

There are two factors driving the aluminum story.

One is that you have seen subsidies in places like china continuing to fuel supply growth despite the economics deteriorating.

The second issue is when you look at energy prices, particularly natural gas prices and coal prices.

The weakness in coal prices is an extension of shale revolution in the united states.

This has put downward pressure on coal prices, gas prices and power prices.

When we look at the margin in aluminum, they are dropping because of the cost prices dropping which then stimulates more supply.

This is one of the key reasons we have seen aluminum go into a surplus.

Just what kind of an impact, just talking through your level on aluminum.

You have never seen this level.

That is a big statement.

Yeah.

I think in terms of looking at the -- the dynamics that are hidden in the market, when we look at the shale revolution.

You think about what is aluminum?

It is primarily solid energy.

Look at the shock that has occurred in the united states off the back of the shale revolution is something we have never seen before either.

We're going to have to leave it there, jeff.

I want to get a sense from you, are we just too excited that we're going to see taper pushed out further and sfwurte 2014? -- further into 20 2014? i think it is important to distinguish the direct versus the indirect.

The ones that have a direct impact would be the precious metals and not the industrial metals.

Your concern about too much optimism was priced in immediately after the government shut down.

We saw a modest rally.

Most of that has been given back with some improvement in economic data.

As we look forward, we see that the outlook for gold is primarily predicated on the u.s. economic data.

If we continue to see improved data there, we would expect to see further downside risk in gold prices.

However we don't see the real downside risk materializing until the first quarter of next year.

Let's talk about -- if it is growth and risk, give me your vee view, jeff, in terms of shutdown, the impact.

Your outlook for 2014 g.d.p. in the u.s. and then finally, if it is not too much, give me your gold target.

We have a target at the end of next year at 10.50. further growth implies for tapering and the reversal to have money and easing policy that has been put in place.

I want to emphasize that that is a view for gold denominated in u.s. dollars.

If you were to denominate it in euro or yen, it would be a different story because they don't have the same type of pressures.

Let's talk about china.

China is having its third -- all about strategy for china.

You know, base metals.

Commodities, absolutely linked to what happens in china and growth.

What is your view for this weekend?

What is your view on china and how does that play into your global commodity playing?

Well, i think again, it is important to distinguish between cyclical dynamics in china and structural.

Sickically we're more positive than what we were earlier in the year and at the end of last year.

That is going to be supported.

There is a structural story overlaying us.

We look at the demand growth for many commodities, particularly copper, iron other and some others, infrastructure-related commodities, we see a slowing in the demand growth as well as oil.

Are we going to return to the demand we saw in 2009 and 2010? unlikely.

We expect china to deliver demand growth, but not at the same rate it was in the last two to three years before 2012. take me inside.

You're thinking on iron other.

If we look at iron ore.

It is so important in terms of my equity investing into some of the miners and the perception of where that commodity goes.

Do i sustain around this $130 or is it going to be a struggle?

We argue it is going to be a struggle.

It is coming from unsubsubstantiate rble increases in supply.

It is a similar story that we see in copper as well.

After the very high prices that we saw over the previous decade, substantial ininvestments in capacity, this capacity is likely to materialize in significant growth and supplies.

To give you some numbers r particularly in copper.

Trend supply growth was expected to be 2.5% over the last decade.

We see that accelerating up to 8%. our call for weaker iron ore prices and copper prices is not being depriven by so much a weak china but increases in supply.

It is interesting that you note when you talk about the supply factor.

That is going to put a cap on copper for me and take me lower there.

When we go over and have a look at aluminum again, you're critical in terms of the lack of response taking capacity out of system and that will weigh on your aluminum call.

Yeah.

There are two factors driving the aluminum story.

One is that you have seen subsidies in places like china continuing to fuel supply growth despite the economics deteriorating.

The second issue is when you look at energy prices, particularly natural gas prices and coal prices.

The weakness in coal prices is an extension of shale revolution in the united states.

This has put downward pressure on coal prices, gas prices and power prices.

When we look at the margin in aluminum, they are dropping because of the cost prices dropping which then stimulates more supply.

This is one of the key reasons we have seen aluminum go into a surplus.

Just what kind of an impact, just talking through your level on aluminum.

You have never seen this level.

That is a big statement.

Yeah.

I think in terms of looking at the -- the dynamics that are hidden in the market, when we look at the shale revolution.

You think about what is aluminum?

It is primarily solid energy.

Look at the shock that has occurred in the united states off the back of the shale revolution is something we have never seen before either.

We're going to have to leave it there, jeff.

Time is against us.

This text has been automatically generated. It may not be 100% accurate.

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