London –(Kitco News) --Despite setting an all-time record of $1,265 per ounce in late-June, the London-based commodity broker Natixis is forecasting gold will drop to as low as $1,050 per ounce during 2010’s fourth quarter in a report released Friday.

“We forecast a slide in prices in the third quarter, perhaps accelerating in the fourth quarter, with the market at some point this year approaching the $1,050/oz mark to give an annual average of $1,125/oz,” Natixis said.

Due to the sovereign debt problem slowly becoming less of an issue, the need for gold as an alternative safe haven asset is being reduced. Another bearish factor is producer de-hedging, Natrixis reported, “which having averaged around 350 tonnes a year for the period 2006-09 is set to fall to trivial levels due to the much reduced scale of the outstanding hedge book”.

“With gold’s negative fundamentals being deep-seated, further weakness in 2011 could take the average price down as far as $950,” Natixis said.

The report said Palladium is expected to maintain its growth mainly driven by the automotive industry and the demand for petrol driven cars.

Platinum is also expected to perform positively due to labor disputes, energy distribution and safety issues affecting South Africa’s Platinum supply, the world’s primary producer of the metal.  

“Overall, we expect platinum prices to average $1,600/oz for 2010 as a whole, with the average palladium price at $465/oz.  Next year, ongoing increases take our forecast for platinum to an average of $1,700/oz and palladium to $510/oz,” said Natixis.

Natixis forecasts silver to follow gold and slip to as low as $16 by the end of the fourth quarter. A more bullish base metals market in 2011 is expected to give some support to industrial silver demand, with an average price of $15.50 per ounce, Natrixis reported.

By Alex Letourneau of Kitco News aletourneau@kitco.com

Editor’s Note: Meet the Kitco News Team at the upcoming Kitco Metals eConference September 12-13, 2010. A not-to-be missed event featuring Ron Paul, Marc Faber and other industry heavyweights. The eConference is free with Pre- Registration www.kitcoeconf.com.

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