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(Kitco News) - Commodity prices could rise “markedly” this year on the back of a global economic recovery, said a German bank on Tuesday.

Gold prices will rise in the medium-term, but now the metal is now being hampered by rising economic optimism and lower risk aversion. In the short term, prices could fall further. Inflation fears should pick up later this year as economies improve, supporting gold, said Commerzbank in a research note.

The expansive monetary policy of the central banks is also supporting demand for commodities, they noted. Central banks are likely to keep their interest rates low, which will support precious metals in particular.

“An interest rate turnaround will not take place in either the USA or the eurozone for another two years. The central banks are also likely to support the gold price in other ways: Central banks have bought more than 400 tons of gold each year for the past two years in the emerging markets, which corresponds to 17% of annual global mining output,” they said.

The bank forecast U.S. gross domestic product growth of around 2%, with the Chinese economy to post “sustainable” growth of 7% to 8% annually in the coming years, they said. “China is now the second largest economy in the world and is likely to overtake the USA to become the world’s largest economy in the next 10 years – this is likely to lead to a global increase in commodities demand,” they said.

The firm forecast gold prices to average $1,875 an ounce for 2013, with gold prices rising to $2,000 by the fourth quarter. Their average 2013 silver-price forecast is $38 an ounce, with platinum at $1,825 and palladium at $845.

The firm sees London Metal Exchange copper prices rising about 10% from current levels, to average $8,850 a ton in 2013, and said copper could be one of the best commodity performers this year because of the expected economic growth.

By Debbie Carlson of Kitco News dcarlson@kitco.com

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