SINGAPORE, Dec. 2 -- Commonwealth Bank of Australia raised its price targets for gold and most base metals including copper through 2011 as the international economic environment improves and on expectations for a weaker dollar.
Gold may average $1,042 an ounce in the six months ending Dec. 31 and $1,221 in the half-year ending June, the bank's analysts led by David Moore wrote today in a report, increasing the forecasts by 4 percent and 19 percent respectively. The bank raised its estimates for the fiscal year ending June, 30, 2011 by 14 percent to $1,080 for the first-half and by 5 percent to $946 for the second six months.
Gold has surged 34 percent this year, set for a ninth annual gain, the longest rally since at least 1948, as investors sought to hedge against a declining U.S. currency. The Dollar Index, which tracks the greenback's value against six major currencies, slumped 8 percent in the same period. The precious metal has averaged $960.19 an ounce this year.
Bullion held by the SPDR Gold Trust, the biggest exchange- traded fund backed by the metal, reached a record 1,134 metric tons on June 1, and stood at 1,129.99 tons yesterday.
"While we believed that the fragility of the U.S. dollar would be a supportive factor for the gold price, we had thought that other factors would have a countervailing influence," Moore wrote. "However, the gold price has proved to be more than resilient."
Gold for immediate delivery climbed to a record $1,195.13 an ounce on Nov. 26 on speculation central banks around the world may add to their reserves. India, Mauritius and Sri Lanka have this quarter bought more than half the 403.3 tons the International Monetary Fund set out to sell.
"Continued strength" in most base metals prices has occurred "ahead of improving fundamentals," wrote Moore, chief commodity strategist for the bank.
"Anticipation of an improved international economic environment is likely to remain a powerful factor limiting any pull back in base metals prices," he added.
Moore and his team raised their forecast for copper by 3 percent and 11 percent to $6,194 a ton in the first half and $6,408 in the second half of the fiscal year ending June 30, 2010. The forecasts for the fiscal 2011 half years were increased 12 percent and 8 percent to $6,704 and $7,047, according to the report.
The bank increased its prediction for aluminum by 3 percent to $1,867 a ton in the first half of fiscal 2010, and by 7 percent to $1,910 in the second half. It also raised estimates by 7 percent to $1,981 for the first half of fiscal 2011 and by 5 percent to $2,047 for the second half.
Zinc in 2010 may average 4 percent more than previously forecast at $1,956 a ton in the first half, and 15 percent more at $2,037 in the second half of fiscal 2010. The forecast for 2011 was raised 14 percent to $2,148 in the first half and 4 percent to $2,254 in the second half.