Metals made a spectacular start to the year as prices forged higher on the back of limited supply and ferocious demand from investment funds, according to analysts. This week has seen gold, silver, aluminum and platinum hit multi-year high points, while copper, zinc and lead prices have smashed records.
Metals are also benefiting from the prospect of strong economic growth in 2006 -- in particular from the U.S. and China -- but supply would struggle to keep pace with buoyant demand, analysts added.
"Against general expectations, high prices have failed to attract new production," said Barclays Capital's Ingrid Sternby. "At the same time, the global demand environment has remained strong. This powerful combination, as well as extremely low global metals inventories, will generate even higher prices in 2006," she added.
Gold has the potential to reach $600 per ounce, according to Australian investment group Macquarie, while the precious metal remains near its highest level for a quarter of a century. The price of gold raced to a fresh 25-year high point on Jan. 9, hitting $551.65 per ounce, the highest level since January 1981. It had already jumped 20% during 2005.
On Jan. 10, copper forged a historic record of $4,630 dollars per ton -- the highest since copper was first listed in its current format in 1870. The price of copper, used for electrical wiring and plumbing, had leapt by some 50% during 2005.
Aluminum hit a 17-year high of $2,375 dollars per ton.
Furthermore, platinum notched up a near-26-year peak on Jan. 10 of $1,022.50 per ounce. And on Jan. 11, soaring lead and zinc prices broke historic records, while silver approached a 22-year high as it surged to $9.41 per ounce.
The performance of the metals complex in 2006 reflected a raft of factors, according to Societe Generale analyst Frederic Lasserre. Those included "a strong underlying physical supply-and-demand balance and the increasing investor appetite for hedging against financial, economic and geopolitical risk," he said.
Copyright Agence France-Presse, 2006
