Natixis upbeat on long-term base metals, not gold

TORONTO (miningweekly.com) – As base metals prices continued to tank this week, Natixis Commodity Markets sounded a somewhat bullish note for next year, predicting copper will average $9 850/t – well above Tuesday’s price of $6 794.

Though the projection is 7% lower than the commodity broker’s previous one, it still bodes well for producers of the metal if it turns out to be accurate.

Strikes at operations in three major producing countries – Chile, Indonesia and Peru – meant that the copper supply picture has deteriorated over the last three months, and the apparent copper surplus this year is likely to be mainly the result of a bout of destocking, Natixis said in a press release.

“While there is clearly a risk that global demand for copper may deteriorate further as a result of the current global slowdown, if a strengthening of demand in developing countries combines with a period of restocking, the copper deficit in 2012 may become very substantial,” the London-based firm noted.

For gold, Natixis reiterated its belief that the price was in a bubble and that the price would drop in coming years.

The company predicted bullion would average $1 450/oz in 2012, which indicates that the precious metal could still fall significantly from the already lower levels of around $1 625/oz.

Gold reached a record high above $1 900/oz last month as investors sought a haven from currency devaluation and inflation.

The heightening concerns over the European sovereign debt crisis and the increasing belief that Greece will default sent the metal plunging below $1 600/oz as investors had to sell to cover losses in other sectors.

Natixis maintained its long-term bullish outlook for other precious metals like platinum and palladium, which are largely industrial commodities used in the automotive sector to cut exhaust emissions.

“Automobile ownership rates among the growing middle classes in the developing world will inevitably push significantly higher in coming years,” it commented.

Platinum is used in diesel vehicle catalysts, popular in Europe, which may see a slowdown in the near term, the company added.

Natixis said that silver prices had been on a “rollercoaster ride” of late – diving from highs above $50/oz earlier this year to less than $30/oz.

“With indications that the global economic slowdown is clearly affecting silver’s industrial demand base, we would expect silver prices to underperform gold over the remainder of the year,” it noted, predicting an average price of $27.50/oz for next year.