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BMO: PGMs, Nickel Could Buck 2Q Seasonal Trend; 2014 Gold Forecast Revised to $1,263/Oz

By Kitco News
Wednesday April 16, 2014 9:06 AM

(Kitco News) - This could be the year that certain industrially oriented metals rise in the second quarter, thereby bucking their seasonal trend, said BMO Capital Markets.

“Nickel and the PGMs (platinum group metals) are experiencing specific supply disruptions that, if sustained, could maintain upside price support through a
traditionally weak season and potentially over the longer term,” the firm said in a quarterly forecast released Wednesday.

Copper has underperformed for the year to date but could improve as prices normalize to reflect a tight market this year, the bank said.

BMO revised its forecasts and now sees gold averaging $1,263 an ounce in 2014, up from $1,250 previously. BMO’s silver 2014 forecast was lowered to $20.24 from $20.50. The platinum outlook was hiked to $1,465 from $1,400 and the palladium call was upped to $793 from $750.

Current 2014 base metals forecasts include copper, $3.20 a pound ($3.25 previously); aluminum, 79 cents (78 cents previously); nickel, $7.10 ($6.60); zinc, 94 cents (95 cents); and lead, 99 cents ($1).

Normally, BMO said, the second quarter tends to be a weaker period for metals since there tends to be a decrease in end-user buying ahead of the summer slowdown in the Northern Hemisphere.

“This year, however, both platinum and palladium have had some stronger-than-seasonal support due to the ongoing labor strikes in South Africa,” BMO said.

Palladium could also benefit if Western nations should impose sanctions on key producer Russia over the Ukraine crisis, BMO said. Nickel prices, meanwhile, are benefitting from anticipation of a large supply deficit due to the ore export ban out in Indonesia, BMO said.

BMO sees platinum averaging $1,475 an ounce in the second quarter after $1,434 in the first, with palladium averaging $800 an ounce in the second quarter after $751 in the first. Nickel is seen averaging $7.25 per pound in the second quarter after $6.65 in the first.

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Meanwhile, BMO Research said it sees gold declining through the year due to its expectation for the U.S. dollar to strengthen. The firm listed a second-quarter forecast of $1,270 an ounce after an average of $1,293 in the three months of the year.

“However, if seasonality patterns hold, there could be greater risk for downside in July and December, and upside in August-September,” BMO said. “Further, based on India’s auspicious days to buy gold this year, there could be increased physical demand in early May (due to) Akshaya Tritiya and the typical September-through-January festive/wedding season. China’s buying seasonality is reportedly flattening out as retail purchases are spreading to non-traditional holidays such as Valentine’s and the web-driven ‘Single Man Festival.’”

By Allen Sykora of Kitco News; asykora@kitco.com



Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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