Agoracom

By ARTHUR MACDONALD

MANAMA: Commodity prices will continue to rise this year with silver likely to be the top performer. The metal, which is currently priced at $17 an ounce will soar to $50 an ounce by the end of this year.

That was one of the startling predictions made by Saxo Bank Middle East Desk - Sales Trading senior associate Sukru Haskan at the Forex Trading Expo and Conference at the Crowne Plaza Hotel yesterday. He was equally bullish about the oil market.

"We have been saying since January, when oil was at $89 that it will go to $150 this year," he said.

"It is at $117 now and its going to keep going up."

And he was also adamant that gold, which peaked at $1,000 an ounce before falling back to the $920-level would also bounce back.

"In the current global economic climate precious metals are seen as a safe haven and that is what is pushing up the price," he said.

There is particularly strong buying of gold and other metals in developing countries like Turkey, India, China and Brazil.

On the currency front he was bullish on the dollar arguing that it would strengthen from about $1.60 against the euro to $1.50.

"We are now moving in favour of the dollar," he said.

"The US is in recession and Europe is now in recession or going into recession as its economy follows the US by about three to four-and-a-half months.

"The effect of the subprime has been felt in the US but by the end of this year we will start to see steady growth.

"The US economy will take off slowly and you can see that from the yields on the bond markets.

He said that while India and China were booming their growth rates would begin to slow down.

"The growth rates in these countries are so high that it is pushing up food prices because of the massive growth of the middle class.

"The increase in wealth means that people are eating more and eating more meat and that is putting pressure on food prices."

But his most chilling prediction was for the continued rise in the price of basic foods.

"The growth of the middle class in developing markets will ensure that food prices, which doubled in the last year, will double again in the current year," he added.

"That will create a lot of poverty and cause serious problems for more than one billion of the world's poorest people." business@gdn.com.bh