Inside Citi’s 2013 Precious Metals Outlook

As 2012 nears its close, investors are beginning to look toward a new year, one that will hopefully be less volatile for the commodity world. The precious metals world, in particular, saw a fair amount of volatility through out the past year as this elite group of four has rarely had a quiet period. With the approaching fiscal cliff and economic uncertainty fresh in the minds of many, predicting where these commodities will end up next year has become a hobby of analysts all across the market [for more precious metals news and analysis subscribe to our free newsletter].

Citigroup Inc. (NYSE:C) recently came out with their forecast for these four metals for the coming year, and they have some insights that investors may want to pay attention to prior to making allocations.

Gold To Gain…For Now

Gold’s average price in 2012 fell at $1,679/oz, and Citi expects the yellow metal to add to that tally for the coming year. Citing President Obama’s re-election and the continuation of a “dovish monetary policy,” the financial juggernaut has pegged gold to average $1,750/oz for next year, a gain of 4.2%. But Citi also predicts the metal to contract in 2014, back down to $1,655. Note that this would be the first annual loss for gold prices in 13 years.

Silver Not So Shiny

Jim Rogers may have called silver a better investment than gold, but Citi is not so sure that sentiment will hold true for the next 24 months. This white metal averaged $31.3/oz this year, and that is expected to dip to $31.0 for 2013 and all the way to $26.5 for the year after. The banking giant points out that silver will see a supply increase, but will be damaged by weakening supply in the industrial and jewelry segments; two of silver’s biggest [see also What is the Best Silver ETF?].