UNITED STATES June 12 2014 2:45 PM
NEW YORK (Scrap Register): Deutsche Bank looks for industrial metals to outperform precious metals.
“We view the macro environment as remaining hostile to the (precious) sector and specifically gold given our belief that the S&P 500 will hit fresh highs, U.S. long-term real yields are set to move higher and the possibility that divergent monetary policies between the Fed and the ECB (European Central Bank) trigger a more meaningful turn in the US dollar during the second half of the year,” said Deutsche Bank.
“Industrial metals have been the best-performing sector on a total returns basis during the second quarter. A snapback in U.S. GDP growth as well as the Fed preparing the groundwork for a turn in U.S. monetary policy should be supportive for industrial metal prices over the coming year. Indeed nickel, copper and aluminum have traditionally performed strongly in the months following a move higher in U.S. short-term interest rates,” they added.
“While concerns towards the Chinese property market have escalated this year, we view the latest downturn as cyclical. Indeed, we see a positive structural story regarding urban property demand and hence constructive activity heading into next year. We therefore expect industrial metal returns will outperform relative to energy and precious metals,” Deutsche Bank concluded.