Last Updated : 21 December 2011 at 20:30 IST
Reasons why silver, gold, platinum looks bullish in 2012: BofAML
Silver and gold will likely suffer a setback this month but eventually prices may be hitting $34 and $2,000/oz respectively in 2012. Meanwhile, platinum is likely to touch 1500/oz, said a report from Bank of America Merrill Lynch (BofAML).
The recent falls in gold have been contributed to a strengthening US dollar and persistent...
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Silver and gold will likely suffer a setback this month but eventually prices may be hitting $34 and $2,000/oz respectively in 2012. Meanwhile, platinum is likely to touch 1500/oz, said a report from Bank of America Merrill Lynch (BofAML).
Given the deteriorating outlook for global growth, BofAML is cautious on adding commodity risk.
However, an upcoming recession in Europe has increased the likelihood of additional easing from the Fed, the European Central Bank and the Bank of Japan. It has also pushed back market expectations for the timing of the first interest rate hikes across Developed Markets central banks. In addition, Emerging Markets central banks are currently pursuing lower real interest rate paths in response to the recent risks emanating from Developed Markets.
Why gold looks bullish for 2012
Gold may be bullish in 2012 as Central banks by and large are expected to maintain loose monetary policies, with scope for more aggressive balance sheet use in the US and Europe; negative real rates are positive for gold and they should persist through 2012 in the US. Investors will likely remain net gold buyers. Reserve diversification into gold is set to continue, for instance by central banks. Gold demand from countries like China looks set to increase.
Why silver looks bullish for 2012
BofAML also forecast $37/oz for silver in 2013 while $30/oz for the moment. There is a good upside potential in 2012 silver prices because of continued interest in the metal. Silver fundamentals have been improving in recent years for a host of reasons, including increased demand from emerging markets, somewhat reduced drag from the photography sector and higher usage from new applications. This suggests that gradual increases of silver quotations were justified.
Use in applications like solar panels should increase going forward. Demand from the photography sector has fallen steadily and scope for further large reductions in off take is limited.
Why platinum looks bullish for 2012
According to the Bank, platinum looks bullish as production in South Africa remains challenged. Demand from auto catalyst producers has been rebounding, though Japan episodes of calamities caused temporary disruptions in global supply chains. The platinum market is too small to sustain several ETFs, and inflows into these vehicles are set to support prices.
