LONDON (Commodity Online): Scotia Moccatta, global leader in precious metals trading and finance, has announced that in 2010 silver is all set to trade a wide range driven by strong investment buying and an increase in fabrication.
Gold is expected to trade between $850 and $1,400 while platinum is called at between $1,100 and $1,900.
Palladium is expected to range from $250 to $420 while rhodium is expected to register the highest gains, trading between $1,400 and $3,000.
The studies review both supply and demand patterns in all the precious metals; this is a brief distillation of part of the PGM assessments.
Scotia describes the falls in the platinum group metals prices last year as a reality check, but argues that the steady rebound across the sector is fundamentally justified and looks to be sustainable. ETF buying is expected to remain strong for as long as the fundamentals remain bullish. The implication is that this will be for at least the next year, with industrial demand for all metals expected to start recovering slowly, but with momentum building over the course of next year.
Rhodium demand, which is reliant as to more than 80% on auto demand, is expected to suffer heavily in 2009, and supply is projected to overhang the market for a period, especially as new production coming on stream is expected to involve properties with comparatively high-grade rhodium content. The price will pick up; however, as demand recovery becomes widespread - and the concentration of production in South Africa means that the price risk lies to the upside.
As far as platinum is concerned, increasing demand is likely to be bolstered by restocking activity when confidence starts to recover, notably within the automotive sector, although the European industry is expected to dip in the wake of the cash for clunkers scheme.
China remains the bright spot in the auto sector (and elsewhere), aided by government incentives, although the bank suggests that this burgeoning in demand was likely to happen anyway because of the high rate of growth in demand for vehicles before the economic slowdown developed; this is compounded by the large pool of potential first time buyers on the horizon.
Other industrial uses are also likely to recover well, especially in the glass sector which will benefit from the dual recovery in consumer spending (flat screen TVs, for example) and increased computer sales as industry starts hiring once more.
Although over the longer term the platinum jewellery sector has registered a price-elastic decline, Scotia points out that despite the recession, platinum jewellery has held up well in the face of the drop in gold jewellery demand; this is a result of strong growth in China, a steady performance in Europe, with a fall in the US and a sharp drop in Japan.
The bank notes that after the sell-off in the platinum ETFs in the second half of 2008, buying has picked up smartly and accelerated since this past August, a feature that is ascribed to fresh dollar weakness and perhaps on concerns that the equity rally might be close to running its course.
