Fitch reviews metal prices for ‘tight market supply’, warns that the price of gold will fall to $ 1,200 in 2023


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(Kitco News) Metal prices will see a significant boost in the near term as the global economic recovery squeezes the limited supplies available, Fitch said in its updated outlook.

“Fitch Ratings has revised some of its metal and mining price assumptions as the prices of many commodities will benefit in the short term from the return in demand, while supply response remains sluggish and inventories slow. they are running out, “the company said in a report.

The biggest short-term beneficiary will be iron ore due to its limited supply in the market, which is expected to persist for the next two years.

Fitch said it projects iron ore prices to trade at $ 125 from its previous forecast of $ 90.

“Vale has cut its production guidance for 2021, which has not led to a supply response to growing demand, with all large-scale iron ore producers operating near full capacity. Inventories are running low, while we expect additional demand linked to US economic stimulus packages, “Fitch said.

Copper is next on the list due to supply risks for the metal, with Fitch projecting $ 7,200 a ton from its previous forecast of $ 6,000. This is still a conservative estimate, considering that copper was already trading above $ 9,000 in February.

“We have increased the short-term copper price assumption due to strategic purchases by the China State Reserve Office and supply risks in 2021, including labor contract renewals in Chile and Peru, which may result in strikes. Prices in the medium term will be supported by balanced market trends and the energy transition, as copper is used in charging infrastructure, cabling, electric vehicles, wind generators and transformers, ”Fitch said.

Zinc prices will also see substantial gains due to increased demand in China. But Fitch expects production to pick up “relatively quickly.” Zinc is projected to rise to $ 2,500 a ton in 2021 before falling to $ 2,100 in 2023.

The Aluminum estimate for 2021 was also raised from $ 1,650 to $ 1,950 for 2021.

However, for gold, the outlook is much more bearish despite the upward revision in prices, according to the report.

Fitch has increased its 2021 price forecast from $ 1,400 to $ 1,600 an ounce. But the projection is still $ 133 lower than current trading levels, which some analysts already consider oversold. At the time of writing, April Comex gold futures were trading at $ 1,733.60, up 0.62% on the day.

On top of that, Fitch sees further gold weakness in the coming years, projecting $ 1,400 for 2022 and $ 1,200 for 2023.

“We have raised the gold price assumptions for 2021 and 2022 due to increased demand due to investment flows and central bank purchases. We believe that prices will moderate in the medium term to a balance of USD1,200 / oz, “the report noted.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes. It is not a request to make any exchange of commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept responsibility for loss and / or damage arising from the use of this publication.

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