Metal prices to be on a high in 2007, says UBS

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April 28 Metal prices will mostly peak next year as bigger-than-expected investments from funds buoy prices, and investors should buy gold, zinc, uranium, platinum and aluminium, UBS AG said in a report on Friday.
The bank raised its forecasts for this year and next for aluminium, alumina, copper, nickel, zinc, gold, silver, platinum, palladium, rhodium and uranium. The 2006 and 2007 forecasts for thermal coal, which is burned in power plants, and benchmark European hot-rolled (HR) coil steel were also increased.
UBS AG raised its price forecasts for this year and next for gold, platinum, zinc and aluminium. Gold will average $750 an ounce in 2007, from a previous forecast of $600, the bank said in a report on Friday. The 2006 estimate was increased to $630 an ounce, from $560. Platinum will average $1,100 an ounce this year, from an earlier forecast of $1,020, and $1,200 in 2007, from $965.
The forecast for this year’s average zinc price increased 65% to $3,638 per metric tonne. The estimate for 2007 increased 95% to $4,079. The aluminium estimate for this year was raised by 15% and for next year by 34%. Forecasts for palladium and silver were also increased.
“Fund flows into commodities as an asset class has been more vigorous than anticipated,” the bank said in the report. “Clearly fund flows have the potential to lift price levels beyond that simply justified by supply, demand fundamentals.”