Editor's Note: Introducing BREAKING NEWS AND VIEWS on Kitco.com, the latest tool to keep you in-touch with what's happening in the markets. When big news hits you'll find it first on Kitco.com.

(Kitco News) - Gold prices are forecast to rise above $2,200 an ounce in 2013, supported by central bank stimulus action, said a German-based bank on Tuesday.

Energy and industrial metals could get a leg up next year because of policy actions, even though fundamentals are poor because of a weak growth outlook, Deutsche Bank said in a research note. The bank also said supply constraints in South Africa could support platinum.

Analysts at Deutsche Bank also said the U.S. “fiscal cliff” – where automatic tax increases and spending cuts kick in during January – could damage the growth outlook for commodities if U.S. politicians aren’t careful in sorting out these decisions.

“We believe the major beneficiary of a third round of quantitative easing by the U.S. Federal Reserve and fiscal cliff fears will be the precious metals complex. Not only will it keep U.S. real interest rates negative for the foreseeable future, but, it will sustain U.S. dollar weakness, in our view,” the bank says.

The bank said that the move above $2,200 would be an extreme, if it occurred. “Commodity prices can be prone to overshooting,” they said. Their 2013 average estimate for gold is $2,113, which is a 3% rise above their previous estimate. They see gold prices averaging $1,850 in the fourth quarter, which is a 2.6% discount to their previous estimate. Their fourth-quarter average estimate for silver is $37 an ounce, also down 2.6% from their previous forecast. They put 2013 average silver prices at $44, up 3% from their previous estimate.

PGMs will benefit not only from QE3, but also from the supply disruptions in South Africa, and the bank  said prices could rise further next year. Their one caveat is that “positioning risk” is building – referring to the growth in bullish positions in the PGM futures markets.

The South African strikes have left the market in balance in regards to supply and demand and any supply problems could push platinum prices to a premium over gold, they said. There are limits to the strength in platinum, however, because of likely lowered European car sales. Their fourth-quarter average estimate for platinum is $1,575 an ounce, down 3.1% from their previous forecast. They put 2013 average platinum prices at $1,644, down 3.3% from their previous estimate. Palladium fourth-quarter prices are seen averaging $630 an ounce, down 12.5% from their previous outlook, while the 2013 forecast is $700, down 6.7% from before.

Base metals should find support from central-bank policy, but are vulnerable to pressure by the U.S. fiscal cliff concerns, EU sovereign risk problems and slowing of Chinese growth. The bank said it prefers buying copper because of “sound” fundamentals, while it would sell lead and aluminum, saying that fundamentals there are “considerably less robust.”

The bank is “cautiously bullish” on energy prices and is selectively bullish on certain parts of the agricultural complex, citing tight supplies for soybeans and wheat.

By Debbie Carlson of Kitco News dcarlson@kitco.com

<<Back to more Kitco exclusive news