KUALA LUMPUR (Dec 9): Fitch Solutions Country Risk and Industry Research has forecast most metal prices in 2023 to average at lower than 2022 annual average levels.
In its weekly commodities strategy report on Thursday (Dec 8), the firm nevertheless said prices will still increase from spot levels in December 2022, as Chinese economic growth outperforms and supports industrial metal demand.
“Our Country Risk team forecast the global economy to grow by 2.1% in 2023.
“Comparatively, the Chinese economy is expected to grow by 5.0% year-on-year.
“The US economy is expected to grow by a mere 0.3% in 2023, with a small recession forecast in late 2023,” it said.
Additionally, Fitch Solutions said the Russia-Ukraine war will continue to remain a threat to metal market stability, as additional sanctions could be introduced.
Alternatively, it said if the war comes to an end, Russian metals could also flood markets and disrupt prices.
Mainland China, the world's largest consumer and producer of most minerals and metals, will continue to drive metal price volatility in 2023, it said.
Precious metals
Fitch Solutions said gold prices have seen a strong rebound since November, as the US dollar has likely peaked and interest rates dropped. "We are now neutral to bullish towards gold prices for 2023."
It said gold prices continued to be dictated by competing economic forces as a myriad of risks surrounded the global economy.
The firm said on the one hand, gold continued to be supported by rising recession risks, the still-evolving Ukraine war, weakening interest rates and the peaking of the US dollar.
On the other hand, growing optimism towards the Chinese economy, still high risks of the US Federal Reserve raising rates further and more aggressively than the market expects, and a peaking of inflation in the third quarter will continue to pressure gold, it said.
“While we expect significant price volatility going forward, especially as the conflict in Ukraine evolves, we expect gold prices to remain elevated in the coming years compared to pre-Covid-19 levels,” it said.