LONDON, Jan 06, 2012 (Dow Jones) -- Deutsche Bank AG (DB) has reined in its expectations for metal prices in the year ahead, citing concerns over the worsening economic picture and the potential for a stronger dollar.
The forecasts for industry-linked metals saw the most significant cuts, with copper's 2012 forecast reduced by 18.8% to $7,350/ton, nickel's outlook cut by 19.0% to $18,625/ton, and aluminum's forecast reduced by 17.8% to $2,138/ton. The bank also cut its lead forecast by 17.4% to $2,138/ton, its tin outlook by 17.5% to $20,625/ton, and its zinc outlook by 12.4% to $2,038/ton.
"We expect that near-term deflationary fears from the worsening economic picture in Europe and intensifying hard landing fears in China may continue to depress pricing for the base metals complex," the bank said.
While the first quarter of 2012 will likely be the weakest for the base metals, prices should improve as the year progresses, the bank added.
The bank also lowered its 2012 forecasts for platinum and palladium by 18.7%, to $1,525 a troy ounce, and 12.8%, to $698/oz, respectively. Expectations for silver's price performance this year were lowered 9.8% to $37/oz.
The German bank reduced its average estimate for the gold price this year as well. The bank lowered its forecast by 3.9% to $1,825/oz on expectations of a stronger dollar, which tends to hinder rallies in the dollar-denominated metal.
"However, we view underlying fundamentals as still bullish," said the bank, one of the London Bullion Market Association's 11 market-making members.
"The persistence of negative real interest rates will sustain the appeal of holding gold, in our view. We also expect central bank gold buying will continue and that tail event risk as it relates to the European sovereign debt crisis and the European Central Bank's balance sheet will encourage gold prices to recover."