JPMorgan lifted its 2009 price forecasts for gold and silver on Friday and said new record highs for gold at $1,050-1,100 were likely in early 2010.
In a research note, the bank said it has revised its 2009 price view for gold up to $948 an ounce from $939 an ounce predicted in July. It said it now sees silver at $14.30 an ounce, against a previous forecast of $13.90.
For next year, it lifted its gold and silver forecasts to $1,006 an ounce from $950 and $15.80 an ounce from $13.40 respectively -- a rise of nearly 18 percent in silver's case.
"Overall we are looking for gold to average around $1,000 an ounce in the fourth quarter... but new highs between $1,050 and $1,100 look likely for early 2010," it said.
The bank said, however, that investors may currently be paying too high a price for gold as an inflation hedge.
"We do remain concerned that gold as an 'inflation trade' is both expensive and premature," it said. "But the flows speak for themselves, as gold has been the overwhelming beneficiary of investment allocations to commodities all year."
Spot gold hit record highs on three successive sessions this week, peaking at $1,061.20 an ounce on Thursday. At 1012 GMT on Friday it was at $1,048.10 an ounce.
The bank also lifted its forecasts for base metals copper, aluminium, nickel, zinc and lead for 2009 and 2010, though it said it expects 2010 to be "a year of consolidation in the base metals, as opposed to a year of new highs or lows in price".
JPMorgan said it now sees copper averaging $4,998 a tonne this year, up from a previous forecast of $4,775, and raised its price view for aluminium to $1,647 a tonne in 2009 from $1,608.
Next year it sees copper at $5,950, against a former view of $5,563, and aluminium at $1,844, up from $1,775.
"All of the base metals markets are in surpluses, not just in 2009 but also in 2010," JPMorgan said.
"While the expected restocking activity will deliver a significant fillip to prices and allow a solid Q1 price recovery relative to an expected soggy Q4 performance, we are not confident that rallies can be sustained."
Lead saw the largest percentage rise in forecast, however. The bank lifted its 2009 price forecast for the battery material by 10.7 percent to $1,658 a tonne, and its 2010 price view by 22.1 percent to $1,863 a tonne.
JPMORGAN CALENDAR AVERAGE FORECASTS
2009 2010 2011 COPPER ($/tonne) New 4,998 5,950 5,750 Old 4,775 5,563 5,750 ALUMINIUM ($/tonne) New 1,647 1,844 1,900 Old 1,608 1,775 1,800 NICKEL ($/tonne) New 15,567 17,125 16,000 Old 15,556 15,750 15,000 ZINC ($/tonne) New 1,586 1,894 1,850 Old 1,517 1,713 1,750 LEAD ($/tonne) New 1,658 1,863 1,700 Old 1,498 1,525 1,650 GOLD ($/oz) New 948 1,006 1,000 Old 939 950 900 SILVER ($/oz) New 14.30 15.80 15.40 Old 13.90 13.40 10.50 PLATINUM ($/oz) 1,183 1,338 1,469 PALLADIUM ($/oz) 250 306 425
