LONDON, Jan 25 (Reuters) - Precious metals are expected to
build on a stellar 2010 this year as risk aversion and
persistently low interest rates boost their allure, a Reuters
poll showed on Tuesday.
Expectations for gold's performance have risen sharply, with
the survey of 65 leading analysts, traders and fund managers
predicting gold will average $1,450 an ounce this year, well
above its record high of $1,430.95 an ounce.
A similar poll in July found most respondents expected gold
to average $1,228 an ounce in 2011. Last year the average LBMA
gold fixing was $1,225.60 an ounce.
Below are a selection of comments from respondents to the
survey. All prices are in dollars per ounce.
Mean $1,454.52 $1,471.27
Median $1,450.00 $1,420.00
No of F'casts 65 49
Spot gold was bid at around $1,330 an ounce by mid-morning
JAMES STEEL, ANALYST, HSBC
"We believe that gold will continue to attract safe-haven
buying from risk-averse investors this year, as European Union
sovereign debt concerns persist. The Federal Reserve is likely
to continue with its programme of quantitative easing (QE) in
2011 to prevent deflation from taking root, while the pace of
economic activity in the emerging world will likely remain
strong, igniting inflation fears...The combination of continued
QE in the U.S. and rising inflation pressures in the emerging
world is a particularly bullish cocktail for gold."
HOU XINQIANG, ANALYST, JINRUI FUTURES
"Changes in the geopolitical situation will trigger changes
in foreign policies and relations between major countries, which
may influence gold prices. The economic recovery in the U.S. and
the euro zone is another key issue which will drive gold prices.
In addition, market liquidity, which is mainly determined by the
shifts and timing of shifts in monetary policies in the euro
zone and the U.S., will amplify moves in gold prices.
Speculative buying has been a key player in gold's rally in the
past two years and will continue to push prices in the future.
On the demand side, emerging markets, such as India and China,
should be closely watched."
ROBIN BHAR, ANALYST, CREDIT AGRICOLE
"There are enough things to keep us worried going forward.
In a year's time, hopefully there will have been some kind of
resolution of the euro zone debt situation, and maybe then we
will start to worry about the U.S. deficit or the deficit in
Japan. So the fear factor won't totally be alleviated. There
will always be something that the markets will have to worry
about. For portfolio diversification, there will still be people
wanting to diversify further into gold."
ONG YI LING, ANALYST, PHILLIP FUTURES PTE
"The slow and uneven recovery of the global economy will
likely mean relatively loose monetary policy to stimulate
growth. The U.S. Fed has to unwind its asset purchases first
before raising interest rates. It is thus unlikely to raise
rates until the end of 2011. Gold could be sought as a hedge
against uncertainty and alternative currency. Should gold prices
trend higher, other precious metals may also benefit from their
positive correlation with gold."
SUGANDHA SACHDEVA, RESEARCH ANALYST, RELIGARE COMMODITIES
"One more factor that will... drive gold prices will be the
launch of China's first fund Lion Global Gold Fund, (which) will
invest in gold-backed exchange traded funds overseas. This fund
could bring about a new wave of investment demand in the
country, and more such funds might enter the market."
Mean $30.03 $30.36
Median $29.83 $27.90
No of F'casts 56 42
Spot silver was bid at around $26.65 an ounce by mid-morning
TOM KENDALL, ANALYST, CREDIT SUISSE
"When you look at the chart for silver since the back end of
August last year, you have to think that rate of appreciation in
the price surely can't continue, and I don't think it can in the
coming 12 months. But definitely the sentiment towards silver
from much of the investment market is still positive, and
industrial demand is strong."
FREDERIC PANIZZUTTI, SENIOR VICE PRESIDENT, MKS FINANCE
"We expect silver to remain in the focus, as it shall
increasingly gain consideration as an alternative to gold in
investors' portfolios. Increased physical buying interest and a
wider community of buyers across the globe shall lead silver to
reach new highs. We would not be surprised if silver picked
somewhere between $45-$50 an ounce in 2011. This shall not
happen without high levels of volatility and several sharp
DANIEL SMITH, ANALYST, STANDARD CHARTERED
"Silver has outperformed gold recently, but we feel that
there is now too much speculative froth in the market and it is
overdue a correction. As a result, we think silver prices will
pull back in the months ahead, especially if the U.S. dollar
strengthens, as we expect. However, the underlying fundamentals
are still good and we expect silver prices to benefit from
rising gold prices in the year ahead; and industrial demand in
China should remain supportive for most of 2011."
Mean $1806.90 $1892.74
Median $1800.00 $1900.00
No of F'casts 46 38
Spot platinum was bid at around $1,790 an ounce by
mid-morning on Tuesday.
DAVID JOLLIE, ANALYST, MITSUI GLOBAL PRECIOUS METALS
"Over the short term, platinum looks likely to remain in
surplus. However, the medium term picture for platinum looks
more positive in terms of price appreciation: supply will remain
constrained and is likely to suffer from cost inflation,
supporting the price. Impending legislation to control emissions
from heavy duty and off-road diesel vehicles will be positive for
SUKI COOPER, ANALYST, BARCLAYS CAPITAL
"With more than three quarters of the world's platinum
supply mined in one country, risks to further growth in output
remain concentrated. Producers had indicated prices would need
to trade north of $1500/oz in order to support an increase in
output. Structural issues such as lower head grades, delays in
starting the coal-fired power stations and cost pressures
arising as a result of the strength of the rand have added to
mining difficulties. But serial challenges such as safety
related stoppages, industrial unrest and Eskom increasing its
power tariffs still persist, making for a murky supply outlook."
PETER FERTIG, CONSULTANT, QUANTITATIVE COMMODITY RESEARCH
"The authorities have taken measures to reduce new car
registrations in Beijing, but the risk is that this measure
would also be applied to other areas. This would be a negative
factor for the PGMs and is one reason that we expect the PGMs to
perform worse than gold and silver."
KOICHI IWANAGA, GENERAL MANAGER, SUMITOMO CORP
"Currently, auto catalyst users prefer palladium to
platinum. But between end 2011 and end 2012, a further rise in
palladium prices would force some users to buy platinum. The
shift would be accelerated if palladium prices rise to $1,000 an
Mean $792.52 $838.35
Median $795.00 $850.00
No of F'casts 45 37
Spot palladium was bid at just above $780 an ounce by
mid-morning on Tuesday.
PATRICIA MOHR, VICE-PRESIDENT, SCOTIABANK GROUP
"Palladium is expected to be the top performing precious
metal, because of its use in auto catalytic converters in
small-engine, gasoline-driven cars. Strong auto sales in
'emerging' markets such as China and India and tightening
vehicle emissions standards by 2012 will drive up demand for
palladium, while supply will be constrained."
BERNARD DAHDAH, RESEARCH ANALYST, NATIXIS
"If talk that Russian palladium state supplies are running
low turns out true, then this will be a considerable factor
pushing palladium prices up. South African mine strikes and
electricity issues will remain a worry. Fund and speculative
buying will still play a role as many investors remain focused
on car sales. A slowdown in car sales from developing countries
might send a negative sign and lead to some outflows."
WALTER DE WET, ANALYST, STANDARD BANK
"Palladium remains our favourite in the precious metals
complex, with an estimated deficit this year of 440,000 ounces.
We see good value in palladium on approach of $700 an ounce.
Palladium could be in a fundamental deficit in 2011 for the
first time since 2007."
DANIEL SMITH, ANALYST, STANDARD CHARTERED
"We still believe that palladium is likely to outperform
platinum in the year ahead, although after the recent sharp rise
in the former we think the potential for outperformance by
palladium is now far more limited than it was. A strong auto
sector in China and the U.S. should keep prices on an upward
track, but additional sales of material from Russian stockpiles
represent the main downside threat to prices."
(Reporting by Jan Harvey; Additional reporting by Amanda Cooper
in London, Rujun Shen in Singapore, Risa Maeda in Tokyo, Frank
Tang in New York, Siddesh Mayenkar in Mumbai; Editing by Anthony
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