2010, year of base metals

According to analysts, prices for aluminium, copper, nickel, lead and zinc are all set to outsmart gold prices this year as industrial demand for these base metals from emerging economies increases.

Chin and India are expected to play as the catalyst for base metals prices as these economies will see a huge increase in industrial growth this year.

India's industrial growth in January was 16.7 per cent this year which is a big leap from last year figures.

Again, gold also may see some gains but not like base metals. Gold prices ware unlikely to fall below $1000 per ounce and there was potential for a rise beyond the current $1100/oz level.

Gold price is not going to do as well in relation to other commodities as it did in 2009. That doesn't mean the gold price is going down, it is just that the relativities to other commodities which are much more leveraged to the industrial cycle are going to start catching up.

India's industrial growth was primarily led by the manufacturing sector, especially for capital goods and consumer durables. The growth rate was 17.6 per cent, revised upwards from 16.8 per cent, for December 2009 and was at 1 per cent during the corresponding month in 2008. This means India will be needing more metals for its manufacturing sector in the coming months.

The manufacturing sector grew at a robust rate of 17.9 per cent in January as against a meagre growth of 1 per cent in the corresponding month last year. Mining and electricity also registered significant growth rates of 14.6 per cent and 5.6 per cent respectively during the month under consideration, as against 1.8 per cent and 0.7 per cent in January 2009.

Given a robust industrial growth rate which has been in double digits for four consecutive months and a high inflation rate, analysts expect monetary tightening measures in the fourth quarter monetary policy review on 20 April 2010.