Gold, copper, silver, platinum and palladium will outperform other commodities next year on easing by the U.S. Federal Reserve and supply constraints, according to Bank of America Corp.

Global economic growth will average 3.2 percent in 2013, “modestly” supporting demand for raw materials, analysts led by  Francisco Blanch said in a report today. The so-called fiscal cliff of automatic tax increases and budget cuts could tip the U.S. economy into recession and “abrupt policy changes” in  Europe may cause “large commodity price swings,” the analysts wrote. The bank is neutral on commodities, John Bilton, European investment strategist, told reporters in London today.

“We expect large-scale policy easing by the Fed and the ECB should push gold prices higher,” the analysts wrote, forecasting gold prices at $2,000 an ounce for 2013 and $2,400 for the end of 2014. “A stronger Chinese economy will likely lend support to supply constrained metals next year, and we expect copper prices to average $7,750 a ton in the fourth quarter of 2013.”

Commodities as tracked by the Standard & Poor’s GSCI Spot Index are down 2 percent this year, led by declines in coffee, sugar and cotton. The gauge almost doubled in the three years to 2011 as central banks and governments around the world took action to boost their economies hurt by the global financial crisis in 2008.

Spot gold, up 9.2 percent in 2012, is rallying for a 12th year as central banks join investors buying bullion to diversify assets. Holdings in  exchange-traded products are at a record, data compiled by Bloomberg show, and central banks are also adding to their holdings. Silver has “scope” for a 20 percent rally from the current levels, the bank said.

Bank of America expects grain prices to ease gradually into 2013, while “precariously low inventories” can drive prices higher at the start of the year, it said.

http://www.bloomberg.com/news/2012-12-11/bofa...utral.html