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BMO Research said that it looks for silver to underperform gold due to an uncertain industrial demand outlook in the United States in the near term, as well as expectations for significant supply growth in 2014 and 20..

22 Oct 2013

NEW YORK (Commodity Online): BMO Research said that it looks for silver to underperform gold due to an uncertain industrial demand outlook in the United States in the near term, as well as expectations for significant supply growth in 2014 and 2016.

According to BMO, gold and silver prices to decline through 2014, assuming the US recovery is well under way. Gold could potentially be supported over the longer term by unknown fallout from years of easy money. The last four years of money printing and increasing debt levels are unprecedented, and the medium- to long-term repercussion of these actions can only be speculated.

The 2014 gold outlook was revised up to $1,275 an ounce from $1,181 previously, while the silver forecast was revised up to $21 from $18, they added.

Meanwhile, BMO said it looks for palladium to continue outperforming platinum in the near term. In particular, the bank cited resolution of some labor issues in South Africa that limits the potential for disruptions in platinum supplies and thus upside in the price of the metal.

Also, palladium is more leveraged to the stronger auto markets of the U.S. and China, whereas platinum is more closely tied to the weaker auto markets in Europe.

BMO said it looks for the palladium market to remain in a significant supply/demand deficit over the medium term, although the firm added that this is probably already factored into prices. The bank maintained an average 2014 palladium forecast of $700 an ounce.


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