New Delhi: Morgan Stanley raised its price forecasts for gold and silver on Thursday, citing enhanced contagion risk from the European debt crisis and continued uncertainty over US macroeconomic outlook.
The investment bank said the possibility of renewed US quantitative easing would likely support investor demand and boost the prices for safe-haven commodities.
"Commodities gained in July, outperforming both equities and bonds... Precious metals led the space higher, gaining 9.5 per cent in July (silver was the best performer). Ongoing sovereign debt and economic growth concerns fueled demand for gold and silver," analyst Hussein Allidina said in a note dated August 4.
Morgan Stanley raised its 2011 gold price forecast by 8 per cent to $ 1,511 per ounce, while it lifted its 2011 silver price outlook by 15 per cent to $ 36.21 per ounce.
The bank also lifted its gold and silver price outlook for the coming year and said it retained its conviction that underlying growth and challenges in the supply chain would deliver rising prices into 2012.
"Given current market anxieties regarding debt and growth, silver prices are likely to revisit their recent highs as all of the drivers for the Sep-2010 to Apr-2011 price surge remain intact," Allidina said.
Spot gold climbed to an all-time peak above $1,681 an ounce on Thursday, while silver scaled a record high of $ 49.51 an ounce in April.
Morgan Stanley said in base metals, copper remained its most favored exposure, followed by aluminium.
The bank said its positive view on copper was based on resilient Chinese demand, constrained supply and signs that Chinese destocking was coming to an end.
"The improvement in aluminium demand that we highlighted earlier this year has continued, with inventory financing and delivery bottlenecks reinforcing resilient prices," Morgan Stanley said.
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