"Base metals, led by nickel, appear set to trend higher in 2014 due to tighter supplies, while unfavorable economics should keep pressure on gold and oil and prompt investors to avoid much of the commodity complex, Barclays said on Monday".
In another negative outlook on commodities from a major investment bank, London-based Barclays PLC said that outflow of money from the sector will not end soon, at least not in the first quarter.
It cited a litany of reasons, including comfortable supply levels in most raw materials; a still-sluggish global economy and the likely scaling back of the Federal Reserve's stimulus that had supported commodities.
"It is unlikely investors will warm to commodities in the near term," said Barclays, which until a few years ago was one of the biggest proponents of the sector. Goldman Sachs, often regarded Wall Street's most authoritative voice on commodities, and Citigroup have issued similarly sanguine outlooks in recent weeks".
"Barclays projected oil's benchmark Brent crude to average $101 per barrel in the first quarter, versus Monday's level of nearly $110. It forecast a high of $108 for the final quarter of 2014. Brent is down almost 2 percent this year.
For U.S. crude, the projection was $95 a barrel in the first quarter, versus current prices near $98, and a high of $99 by the year-end. U.S. crude is up about 6 percent this year, outperforming Brent".
"In the case of gold, Barclays advised investors to "short", or bet on a fall in prices, the precious metal after March, its target period for any reduction in the Fed stimulus".
"In spite of that, the bank had a higher price expectation for gold in 2014 versus Monday's traded levels -- a discrepancy it did not explain.
Barclays said gold was likely to average $1,350 an ounce in the first quarter, although it forecast a drop to $1,270 by the end of 2014. The spot price of gold hovered at $1,240 on Monday, down 26 percent so far this year and heading for its first yearly loss since 2000".
Source: Mineweb
