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BMO Lowers Gold, Silver, Platinum Price Forecasts As US Dollar Strengthens

By Kitco News
Monday July 15, 2013 9:40 AM

(Kitco News) - BMO lowered price forecasts for gold, silver and platinum prices as the U.S. dollar will “stay stronger for longer,” the bank said late Sunday.

They also lowered their forecast for palladium, but said the white metal should remain in a production deficit and outperform other precious metals.

Base metals are likely to stay under pressure as demand growth from China is “uncertain” and the stronger U.S. dollar is also a weight. Of the base metals, copper “remains the most fundamentally sound out of a challenged group of metals,” BMO said. Copper inventory levels are rising, but they are still within an average range historically, they added.

The bank slashed its gold and silver forecasts, both short- and long-term. Their 2013 average price estimate for gold is now $1,362 an ounce, down from $1,587 previously. Their 2014 estimate took a bigger hit, now seen at $1,181, down from $1,700 previously. Their long-term average price outlook is now $1,200, down from $1,400.

They cut silver severely. BMO said in addition to the weakness in gold prices weighing on silver, a “softer outlook for industrial demand” was behind the reduction in price forecasts. BMO’s 2013 average price estimate for gold is now $23 an ounce, down from $28 previously. Their 2014 estimate was cut nearly in half, now seen at $18, down from $32 previously. Their long-term average price outlook is now $19, down from $24.

BMO analysts lowered their 2013 average price estimate for platinum to $1,445 an ounce, from $1,595, citing a weaker South African rand. The 2014 estimate is seen at $1,394, cut from $1,650, and the long-term price outlook is now $1,550 versus $1,650.

Palladium’s price forecast fell to $702 an ounce from $739 for 2013, with the 2014 estimate at $700 from $750 previously.  They left their long-term forecasts unchanged at $650.

BMO said of all industrial commodities, palladium is their top pick, saying that the metal will be in deficit for the following reasons: strong demand from U.S. and Chinese automakers, and constrained supply from primary platinum mines and Russia’s above-ground stocks. “Platinum substitution for autocatalysts could take up to a year or more, supporting a lower platinum:palladium price ratio near term,” they said.

Copper’s 2013 price forecast is now $3.30 a pound, down from $3.41, and the 2014 forecast is down 25 cents to $3.25. Aluminum’s 2013 forecast fell by a nickel a pound to 89 cents, while the 2014 outlook is also down five cents, to 95 cents.

BMO’s zinc 2013 price forecast fell 10 cents a pound to 84 cents, and the 2014 forecast fell to 85 cents, down 15 cents a pound from the previous forecast. Lead’s forecast was lowered 8 cents a pound to 94 cents for 2013, and for 2014, it was cut by 10 cents to $1. The 2013 nickel price forecast dropped by $1 a pound, to $6.78 and 2014’s by $1.25, to $7.25.

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By Debbie Carlson of Kitco News; dcarlson@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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