BMO Says Gold, Silver and Platinum To Under Perform in 2015

Gold, silver and platinum prices are expected to underperform other commodity markets in 2015 on the back of a stronger U.S. dollar, with nickel and aluminum likely finding support on improving fundamentals, said a Canadian bank late Tuesday.

In a research note regarding 2015 forecasts, BMO Capital Markets Research said it is also “positive” on the outlook for palladium prices from a longer-term perspective, but said “the potential release of supply from Russia is a near-term overhang.”

BMO lowered its average 2015 gold forecast to $1,190 an ounce, down from $1,275. It reduced its silver forecast to $17.50 from $20.25 and its platinum forecast to $1,413 from $1,500. BMO raised its palladium outlook to $860 from $853.

“Gold price shocks tend to occur when inflation-adjusted Treasury yields move in and out of negative territory. The good news, then, is that real rates are already positive, thus based on this relationship the gold price may not see another significant move down,” they said.

For 2015 average base metals prices, BMO left its copper forecast of $3.05 a pound unchanged. It also maintained its nickel forecast at $11.50 and lead at 98 cents. BMO raised its aluminum forecast to 94 cents from 85 cents and lifted its zinc forecast to $1.02 from 99 cents.

The bank said it lowered its gold forecast to reflect the recent price weakness and reduced their silver outlook to be in line with their gold price forecast. They don’t expect any upside for the yellow metal until at least the second half of 2016, based on U.S. dollar forecasts.

Platinum’s prices were cut on expectations of a weaker South African rand, while the palladium outlook was increased to reflect the ongoing supply deficit, and on the idea that the platinum/palladium ratio will continue to decline.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza