NEW YORK (Commodity Online): Palladium is expected to outperform the rest of the precious metals complex over the next two years, said Paris based bank BNP Paribas in a commodity research note.

According to the French bank, palladium to average $780 an ounce next year, although this is down from a September call of $900/oz. Palladium to be the strongest precious metal next year and also looks for platinum to rise from current levels but continue trading at a discount to gold. Palladium has been hurt by concerns over global economic growth.

“However, better demand prospects for the metal in a context of higher economic growth, combined with severe constraints on the supply side, means that palladium’s current market deficit will become even larger next year,” said Anne-Laure Tremblay, precious-metals strategist at BNP Paribas.

She continued that, “this will eventually have to be reflected in a higher price, which we expect to take place more visibly in second half of next year.”

The Platinum is forecast at $1,705 next year, compared to a $1,820 forecast in September. Platinum is unlikely to recover its premium above gold until late 2014, she added.

Platinum group metals are used in auto catalysts, and palladium will benefit from greater exposure to the improving U.S. and emerging markets. These regions tend to rely more on gasoline vehicles that can use palladium rather than more-expensive platinum, BNP Paribas concluded.