KUALA LUMPUR, Nov 24 (Bernama) -- The investment case for gold has become increasingly compelling with the Central Bank of London buying and a structural change in interest for gold as an investment product among retail customers, according to the latest research from Standard Chartered in London.
"Although the upside will be capped by lower jewellery demand, the increased availability of scrap gold as prices surge to new highs and a periodic dollar strength in the first half of 2010, will see gold moving higher to average US$1,300/oz in Q4-2010 once the dollar resumes its weakening trend," said Helen Henton, global head of commodity research at Standard Chartered.
Gold has averaged US$955/oz so far this year.
In its Commodities Quarterly report, Standard Chartered also forecast that corn and palm oil are likely to benefit from firmer energy prices in the second half of next year.
It also said that after plummeting in Q4-2008, commodity prices have performed well this year.
Crude oil prices are also up 74 per cent, but the energy complex as a whole is down this year as natural gas prices have been weighed down by a massive oversupply.
Crude oil demand which bottomed in Q2 is now edging higher.
The levels of demand is still however below previous peaks. Standard Chartered does not expect the crude oil demand to return to the previous peak (in Q4-2008) before 2012.
The weak demand growth and potential among the leading producers to expand output is likely to keep crude prices capped, with the average price for Q4 of 2010 forecast at $88 per barrel.
Crude oil has averaged $60 a barrel so far this year.
Among agricultural commodities, which have underperformed other commodities this year, corn is expected to lead prices higher in 2010 as a result of poor weather conditions in the United States and China.
Corn and palm oil are also likely to benefit from firmer energy prices in the second half of next year.
In contrast, the winning agricultural commodities of 2009 - sugar and soy beans – are likely to underperform as improved crops flood the market, dampening prices. -- BERNAMA