The African Standard bank released its daily commodities analysis and report for October 7th. The report is the bank’s quarterly preview of the commodities market with key forecasts for gold prices.
For all commodities, it’s more likely to stay in surplus market in 2013. In other words, the stockpiles are still high and expected to grow even more, especially in the metals market.
As for the model of Chinese economic growth, there were two realistic scenarios. The first and the more likely one to occur, is the Chinese economy will rebalance towards consumption. The alternative scenario is that the Chinese economy remains driven by and towards investment. Both scenarios will have different outcomes for certain commodities. The bank gives 30% probability for the Chinese economy to have slower growth rate driven by investment spending.
Gold is more likely to struggle in the next quarter, according to the bank believes. Gold is expected to have an average price of $1,330 per ounce in the fourth quarter in 2013. However, on the longer term, gold is expected to be traded higher over the next five years.
Overall, the bank expects the commodities supply to outpace demand in 2013 or will be soon. Moreover, the stockpiles levels remain high with forecasts to grow faster. Even though the U.S. and E.U. economies are recovering, China will remain the key driver of demand on commodities.
The bank forecasted gold prices for 2014 quarters and an average price till 2017. The price of one ounce of gold during 2013 Q3 was $1,333. The bank expects the gold price to average $1,330 during 2013 Q4. The gold price rally is expected to continue further, as the price of gold might reach $1,400 in first quarter of 2014, and $1,410 during the second quarter if the year. The bank expects the price of one ounce of gold to average $1,440 in 2014, $1,525 in 2015 and $1,620 in 2016. Gold price should reach its peak in 2017 to record $1,720 per ounce, according to the bank’s forecast. The bank expects $1,600 per ounce to be the long-term average price of gold.
As for the real GDP growth forecasts, the bank expects the global economy to recover next year, and average 4.33% GDP growth rate for the next three years. The U.S. economy is expected to grow by 2% in 2013, 3% in 2014, 3.4% in 2015 and 3.5% in 2016. The European economy is expected to have 0.5% GDP growth rate in 2014, 0.7% in 2015 and 2016. China is expected to have a steady growth rate of 7.4% for the next 3 years. India is expected to have 5.7% GDP growth rate by 2016. Both India and China are the only two economies covered by the bank that expected to have +5% GDP growth rate. Other countries, such as Japan, Australia, Canada and Brazil are expected to grow annually by an average 2.6% till 2016.