In the new year gold prices will outperform energy and industrial metals
JP Morgan Chase bank says that in the new year gold prices will outperform energy and industrial metals, because the US dollar weakens and slowing growth in demand hurts crude oil markets says.
Gold is likely to average $435 an ounce this year, up about 5 per cent from 2004, and $450 in 2006, as China's growing middle classes seek more luxury goods, following a trend set by India, the world's biggest gold consumer, the bank says.
However, Morgan analysts predict that oil will start to fall next quarter.
"Many investors look at the strong returns generated on commodity positions in 2004 and wonder whether these markets will stand above other asset classes again in 2005," Morgan foreign exchange and global fixed income strategist JohnNormand says .
Morgan Chase emphasizes either, that besides a weaker US dollar gold prices may also be boosted by a "peaking" level of supply from gold mines and a more predictable rate of supply from gold sales by central banks.