ABN Amro expects gold prices to drop substantially over the next two years on a modest increase in supply and slightly lower demand.
ABN Amro said that it sees gold averaging USD 1,400 per ounce in 2013 and USD 1,300 an ounce in 2014. The USD 1,400 price forecast would be down 18% from gold's price of close to USD 1,720. A slightly stronger world recovery in 2013 and 2014 should lead to a slight drop in gold demand.
The Company said that a stronger recovery is likely to underpin demand for jewelry and hence for gold but a stronger recovery also means that it becomes more attractive to invest in other assets than gold.
The bank said that a stronger US dollar will make gold a less attractive investment asset when the world economy recovers. ABN Amro sees silver prices to increase to USD 35 in 2013 and 2014 on a rise in demand as the metal has a lot of properties that makes it suitable for a whole range of industrial applications.
Saying that palladium is the best investment opportunity the bank expects prices to rise in the coming years due to its usage as catalysts for gasoline cars.
ABN Amro said that cars that run on gasoline are typically sold in Northern America and Emerging markets and we think that demand for this type of car will rise solidly in the coming years. With supply and demand expected to increase, palladium prices should show healthy gains in the coming years seeing prices averaging USD 700 in 2013 and USD 750 in 2014.
Dealers said that meanwhile, November sales of US American Eagle gold coins are set to be the strongest in 14 years as uncertainty surrounding the US fiscal crisis and the presidential election triggered safe haven buying. Occasional sharp price swings during early and late November also boosted bullion coin buying by investors and speculators alike.
Mr David Beahm VP of Blanchard & Company said that "There is a huge influx of new high-net-worth individuals that are buying a lot of gold, and they are taking physical possession of it. Investors have so far this month bought 131,000 ounces of American Eagles produced by the US Mint, more than tripled last year's November sales and marked the strongest November since 1998. November marked the second consecutive monthly rise after a dismal performance earlier this year. In October, the Mint sold 59,000 ounces versus 50,000 ounce in the same period last year. This quarter is shaping up to be one of the best since the last quarter of 2008."