PGMs to battle higher as firmer-footed gold trends lower - Barclays
According to Barclays, precious metals are likely to be driven more by demand than supply in 2014 which will give gold a firmer footing, but also see it trend downwards.
mineweb.com
Author: Geoff Candy
Posted: Monday , 13 Jan 2014
GRONINGEN (Mineweb) -
While there remain headwinds aplenty for platinum and palladium prices in 2014, they are likely to outperform gold and silver in 2014, says Barclays.
Writing in its latest Metals Magnifier note, the bank's commodity analysts explain that "Opportunities to trade the metals are more likely to materialise around event risks rather than outright directional trades."
Part of the reason for this, the bank says is that, precious metals markets are likely to be driven more by demand than supply in 2014. But, it adds, there is also likely to be a shifting of investment and physical demand and a clarification of the "size of above ground stocks".
In terms of the PGMs, Barclays writes, "We expect another deficit for platinum and palladium this year, with supply risks for platinum focused at the start of the year, while palladium faces robust demand and challenging supply. However, sizeable above ground stocks are likely to cap significant potential upside for the PGMs."
While for gold and its sister metal silver, Barclays says it expects to see another surplus in 2014 with "further disinvestment perhaps presenting the largest downside risk."
The reason for this, it says is that the yellow metal saw ETP investment, which had previously been a significant source of demand, become a source of substantial supply in 2013.
While Barclays expects this to slow somewhat in 2014, it adds that, as a result of the changed supply picture, "For gold fundamentals in 2014, the physical demand picture will be key, especially from India and China."
But, here too, it does not expect the pace of demand to match current levels.
"Demand in China has kicked off the year on a strong note, with volumes traded on the Shanghai Gold Exchange firmer y/y in the weeks leading up to the Lunar New Year. Thereafter, we expect it to slow. Demand from India remains lacklustre so far this year and is likely to remain so unless restrictions surrounding trade are lifted."
But, because physical demand is likely to be in the driving seat for gold in 2014, while it is expected that prices are likely to trend lower during the year, they will do so "on a firmer footing". |
