Gold and Oil Bull Runs to Return in 2012: Analyst

Gold and oil will resume their uptrend – but maybe not just yet – Eugene Weinberg, commodity analyst at Commerzbank, told CNBC.

Molten gold
Molten gold

For all its huge oscillation, gold is actually up only around 5 percent this year, but looking at the longer term investors would still have made circa 60 percent from ownership over the past two years.

Weinberg believes gold could be treading water for the next couple of weeks or months but could be set to make new all-time highs by the end of the year. Even the withdrawal of the quantitative easing prop, which has boosted demand for global commodities futures, will not dent the longer term story for gold, he said.

Silver , on the other hand, is not in such a strong position: "Silver is not money like gold, it is more of a commodity… it will remain under pressure in the next couple of months and probably only return to above $40 next year," Weinberg said.

However, the longer term bull story for crude remains strong on the back of Middle Eastern political issues and lack of supply growth.

Weinberg noted that soft manufacturing figures and other data releases over the past couple of weeks have played their part in denting short term crude demand. He also said that indirect factors, including increased inventories elsewhere in the commodity complex, such as copper, are beginning to weigh.

"The next leg upwards for crude though will not be prompted by higher demand but by lower supply," says Weinberg. He believes supply constraints have been underestimated with the huge costs of mining and drilling across the commodity spectrum not fully factored in.

It is within the OPEC cartel, which controls around 40 percent of the world oil market, where supply bottlenecks will occur. Saudi Arabia and the rest of the Middle East will have much higher financing needs in the future.

"Financing needs point to much higher prices. Saudi Arabia can live with $80-$90 per barrel this year but triple digit prices will be needed in the future to fulfil financing and social programs," he said.

“Ten years ago Saudi could cope with $20 a barrel but with higher prosperity for the country as a whole, people want a larger share of this. Recent Middle Eastern tension in a symptom of this,” warned Weinberg.