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8th August, 2012
KUALA LUMPUR: The commodities market is likely to be firmer in the long term as demand increases due to rising middle income families in countries such as China and India.
Haren Shah, senior investment strategist, Wealth Management, Citi Asia-Pacific, said in the short term, however, the prices of the commodities will be range-bound, depending on news flow as people were concerned about the uncertainty in the global economic growth.
“China’s economy is slowing down and that is causing most commodities to ease, including palm oil, as they are a big buyer in cooking oil.
“In the short run, most Chinese companies are cutting their inventories and thus prices have become soft,” Haren said at a media briefing on “Citibank 2012 Mid-Year Investment Outlook.
He said the rebound in demand will happen when the Chinese government embarked on fiscal stimulus to boost economic growth.
Meanwhile, in a statement yesterday, Citi said in the commodities markets, gold continued to be favoured as a ‘safe haven’ and a source of liquidity.
Gold prices could average US$1,645/oz in 2012, it said.
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