Barclays’ 2012 forecasts: Gold to hit $2000, silver to hit $35/oz

LONDON (Commodity Online): Barclays’ forecasts for precious metals in 2012 include gold, $2,000 an ounce; silver, $35; platinum, $1,835; and palladium, $860.

Barclays’ 2012 forecasts for the base metals include aluminum, $2,544 a metric ton; copper, $10,075; lead, $2,506; nickel, $21,125; tin, $28,000; and zinc, $2,300.

According to Barclays Capital, base metals prices would plummet as dramatically as they did after the financial crisis of 2008, even if the economic-growth outlook worsens, that is because there are important differences between then and now.

On the supply side, responses are emerging at much higher price levels than in 2008 and working inventories are now much leaner, so market dislocations from destocking should be less pronounced. The bank considered three scenarios in which global GDP growth turns out lower than its base-case forecast of 3.6% for 2012: a mild slowdown, a moderate slowdown and a sharp contraction.

“In all three cases, we find that global metals demand would be much weaker than what we currently assume under our base-case scenario, but would not fall as much as it did during a similar GDP trajectory in 2008-09,” Barclays added.

The bank said Lead demand looks the least vulnerable to an economic recession, while aluminum andZinc could face the biggest downside from its base-case forecast, based on the historical relationship between demand and global GDP growth.