Gold should push higher from its near-record levels due to its appeal as a safe haven, while iron ore should regain its upward momentum on the back of red-hot industrial demand from Asia, forecasters told the world's larger mining conference on Sunday.
Copper, an economic bellwether due to its industrial versatility, should be well supported at its current lofty levels but may have trouble pushing significantly higher as mine production races to catch up to demand growth, they said.
Addressing the Prospectors and Developers (PDAC) conference in Toronto, forecaster Philip Klapwijk said he saw a stronger case for investment in precious metals as a safe haven as demand for base metals declines due to slowing global growth and political turmoil.
Klapwijk, chairman of metals consultancy GFMS, also said he expected global GDP growth to slow slightly this year as compared with last year.
Prices for gold and silver have risen sharply since the outbreak of violence in the Middle East and North Africa earlier this year as buyers turned to precious metals as a haven from risk.
Gold is holding within $10 of the record above $1,440 an ounce it set on Wednesday, while silver extended 31-year highs above $35.40 an ounce on Friday.
JPMorgan analyst Michael Jansen told a room packed to overflowing with more than 500 delegates -- from corporate chief executives to geologists to fund managers -- that he expects gold prices to average $1,465 an ounce this year.
His year-end target for gold is $1,500, he said, adding the gold production outlook was strong going forward.
We think mine supply is easily on track to grow 3 to 4 percent year on year, he said.
His forecast is slightly more subdued other predictions, such as by Barclays Capital, which said in January it expects the metal to average $1,495 an ounce this year, and range as high as $1,620 an ounce.
GFMS said in a January quarterly forecast that gold may top $1,600 an ounce by the end of 2011.
Klapwijk said gold and other precious metals will also get some impetus as investors exit other traditional safe havens.
We expect the sovereign debt crisis will not be confined to Europe and it will eventually spread to the U.S. and Japan ... It seems to be inconceivable that the U.S. will be able to continue on its current path and maintain its 'AAA' rating, Klapwijk added.
More than 20,000 people are in Toronto this week for the annual PDAC conference. Attendance grows every year at the event, a key barometer of mining investment appetite. This year it has also attracted a handful of top government ministers from key mining jurisdictions.
CHINA LEADS DEMAND
As presenters rolled out their outlook from everything from gold to iron ore, and uranium to potash, there was one key word was in almost every presentation -- China.
Demand from the world's most populous country will help underpin demand for iron ore, the main steelmaking ingredient, said Phil Newman, chief operating officer of consultancy group CRU.
He said 95.1 pct of global steel production growth between 2007 and 2021 will be in Asia.
Iron ore spot prices surged to record highs near $200 a metric ton in mid-February, but have since come off their highs to trade around $178 a tonne.
Newman said he expects prices to resume their upward push, but perhaps not until later in the year.
Certainly in the first half of 2011 we see continued price pressures, he said.
The good times will continue, but we are approaching an inflection point, he said, referring to in iron ore. ... Over the medium term (around 2015), we see prices drifting lower,
COPPER DEMAND AND SUPPLY TO GROW
GFMS forecaster Mark Fellows pointed to strong fundamentals underpinning copper prices, but he did not see big near-term gains from a metal that has been on a steady upward churn.
Copper for three-month delivery on the London Metal Exchange has risen by two-thirds since June, hitting an all-time high of $10,190 per tonne in mid-February on concerns that demand for the metal will outstrip miners' ability to produce it.
Fellows said he expects a growing deficit in copper market in the second half of this year, with the market staying in deficit in 2012 and 2013.
He said refined copper consumption should grow 3.8 percent annually between 2011 and 2013, up from 2.6 percent in the past decade. Mined copper production growth of 3.8 percent between 2011 and 2013, well up from 2 percent production growth in the past decade, he said.