Gold to trade above $2000 by year end: Standard Bank

Precious metal gold is trading low since quite some time as investors have turned away from safe-havens, expecting the US Federal Reserve to announce further monetary easing (QE3) when it meets on September 20. However, some experts still believe that this is the best time to go for gold as it may become more expensive later.

Speaking to CNBC-TV18's Latha Venkatesh, Walter de Wet, head of commodities research, Standard Bank, said that demand for valued metals like gold and silver is still high compared to industrial metals like copper, aluminum and zinc. He feels that gold will trade above USD 2000 per ounce, while silver would trade around USD 45 per ounce before the end of the year. Also read: Gold hits record high of Rs 28350/10 gms Below is the edited script of the interview. Also watch the accompanying video. Q: You are bearish on metals due to the situation not just in the US but also in China. Can you explain your rationale with respect to base metals in particular and precious metals as well? A: Currently, demand for precious metals like gold and silver is high in Asia, South East Asia, India and China. However, for industrial metals like copper, aluminum and zinc, there is no substantial demand coming through at this stage. So, outlook for metals depends on whether you look at precious metals or base metals. Q: What are your levels for copper, aluminium, gold and silver? A: There is more downside for copper at this stage. It is trading at USD 8,500. We could trade aluminum at as low as USD 2,200-2,300; it is currently at around USD 2,400. If we go into recession in the US and Europe, copper and aluminum could trade as low as USD 7500 and USD 1800, respectively. Gold will trade above USD 2000 per ounce and silver would trade around USD 45 per ounce before the end of the year. If we go into recession, those levels may move up to around USD 2200 per ounce either at the end of the year or earlier next year. For silver, we would be close to USD 50 per ounce. Q: What about steel? How is the demand situation currently and what are the levels that you expected in terms of global steel prices? A: Currently, with high iron ore prices, steel prices have also gone fairly high. We have seen decent demand coming through, however, in the current environment, where we have very sluggish growth in the US and Europe, we believe that even iron ore prices and steel prices could come off slightly towards the end of the year. Q: Focusing one of the near term triggers, what are the chances of QE3 announcement? And if that happens and liquidity does improve in the market, what sort of impact do you think it is going to have on metals globally? A: We are not going to see QE this year. There is a possibility of that but it