The impact of the euro zone debt crisis on the global economy is expected to keep global monetary policy loose, which should favour gold, while restricting demand for the more industrial metals like silver and the platinum group metals.
Silver should get a lift on the back of gold, while the PGMs will be cushioned to an extent by ongoing supply disruptions in South Africa, although the prospect of weak car sales has prompted most analysts to scale back their price forecasts.
Below are comments on the outlook for the four metals.
DAVID BEAHM, VP, MARKETING AND ECONOMIC RESEARCH, BLANCHARD & CO
"Gold is reasserting itself as a strong safe haven during the current period of risk and uncertainty. The European debt crisis remains a major issue in the global economic marketplace, and other major indicators in the U.S. and abroad continue to illustrate just how feeble the economy remains. Many investors have moved into gold to protect and grow their wealth, and we foresee global investment demand for gold to grow even further than the 900 percent increase it has seen since 2007."
ROSS NORMAN, CEO, SHARPS PIXLEY
"2012 was always going to be relatively tough for gold just as 2004 was and 2008 was, and for much the same reason - they were all U.S. election years when the dollar did comparatively well. With a run rate of a 17% year-on-year gain over the last decade, gold looks likely to post a modest 12 percent in 2012.
Gold is likely to hold its relationship with the US dollar - in 2012 we inversely seen rupee and euro weakness which has translated into all time highs for gold in both of these currencies - this remains a drag on what might have been runaway gold prices. The relationship will be put to the test when brinkmanship over the US fiscal cliff emerges in the new year, which could easily propel gold back to all time highs above $1922."
DAVID JOLLIE, STRATEGIC ANALYST, MITSUI PRECIOUS METALS
"Gold still remains a virtual currency in the eyes of many people and can act as a form of last ditch insurance. Given the strains that currently exist in the global economic system, we expect gold to continue to benefit from heightened risk and increased perceptions of risk."
BERNARD DAHDAH, ANALYST, NATIXIS
"Over the medium term, our concern with the outlook for silver prices is that once global markets return to greater normality, investment demand might not only diminish, but could turn into a considerable source of net supply. The 16,160 tonnes of silver held in physically-backed ETFs are equivalent to almost half of 2011's supply of silver and 70% of new mine supply.
Earlier in the year, signs of an improvement in the US economy hinted at a possible net outflow, but the situation reversed during the summer months, and with the introduction of a third round of QE, the resultant boost to silver prices from renewed investor demand is likely to take the price of silver for the year as a whole to an average of $32/oz. followed by 30/oz in 2013."
HEATH JANSEN, GLOBAL HEAD METALS AND MINING, CITIGROUP
