Standard & Poor’s recently updated its pricing assumptions for key metals. According to the credit rating firm, the biggest change is a decrease of $10 per metric ton in the forecast price of iron ore. The approximately 10 percent decline is due to an increase of supply from Australia and Brazil, along with a decrease in demand, particularly from China.
Regarding the price of gold, S&P suggests uncertainty regarding quantitative easing has continued to weigh on the precious metal. The firm notes: “Incorporating our expectation of benign U.S. inflation of 1.5 percent to 1.9 percent through 2016, we believe that gold prices will remain particularly susceptible to shifts toward higher U.S. interest rate expectations and a stronger U.S. dollar.”
Additionally, S&P’s assumptions include a 15 percent increase in the price of nickel, driven by an Indonesian export ban