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Fitch updates its metals price forecasts

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(Kitco News) - Fitch Ratings Agency has released its latest report updating its latest mining price assumptions for the future. When speaking about precious metals the report says "Our increased gold price assumptions reflect increased demand due to its ‘safe haven’ investment status, although it has moderated since the height of the pandemic due to better prospects of economic recoveries. We assume the price to re-base at USD1,300/oz in the long term." As you can see from the chart below the longer the period of time the lower the price assumptions go. Obviously, there are many variables to take into account over time. If the pandemic picks up again there would be a case for these asset predictions to be revised. 

There are not many assets that hold up well in this report. The copper forecast also gets lower and lower in value as time moves on but the revisions are much higher than they were previously (as with gold).

Zinc, Aluminium and Nickel are the real winners in this report. Chinese consumption and the supply vs demand imbalance has been cited as some of the reasons for the bullishness in base metals. When it comes to nickel Fitch said " while we kept another medium- and long-term assumptions unchanged due to risks of increased supply from Indonesia, that could potentially lead to small market surpluses.". On Copper, the report noted, "We have raised short- and medium-term copper prices due to strong demand, supported by energy transition trends such as electric vehicle production and renewables roll-out. Copper inventories are at very low levels (less than three weeks’ worth of consumption with exchange stocks at 20-year lows)."


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