AMSTERDAM(BullionStreet): ABN Amro said it expects gold prices to drop substantially over the next two years on a modest increase in supply and slightly lower demand, Reuters reported.

Breaking ranks with other banks that expect gold to rise, ABN Amro said it sees gold averaging $1,400 per ounce in 2013 and $ 1,300 an ounce in 2014. The $1,400 price forecast would be down 18 percent from gold's price on Friday of close to $ 1,720.

A slightly stronger world recovery in 2013 and 2014 should lead to a slight drop in gold demand, ABN Amro said in a note.

"A stronger recovery is likely to underpin demand for jewelry and hence for gold, but a stronger recovery also means that it becomes more attractive to invest in other assets than gold."

A stronger US dollar will make gold a less attractive investment asset when the world economy recovers, the bank said.

ABN Amro sees silver prices to increase to $ 35 in 2013 and 2014 on a rise in demand as the metal has a lot of properties that makes it suitable for a whole range of industrial applications.

Saying that palladium is the best investment opportunity, the bank expects prices to rise in the coming years due to its usage as catalysts for gasoline cars.

"Cars that run on gasoline are typically sold in Northern America and Emerging markets and we think that demand for this type of car will rise solidly in the coming years," ABN Amro said.

With supply and demand expected to increase, palladium prices should show healthy gains in the coming years, ABN Amro said seeing prices averaging $ 700 in 2013 and $ 750 in 2014.

Meanwhile, November sales of US American Eagle gold coins are set to be the strongest in 14 years as uncertainty surrounding the US fiscal crisis and the presidential election triggered safe-haven buying, dealers said.

Occasional sharp price swings during early and late November also boosted bullion coin buying by investors and speculators alike, coin dealers said. "There is a huge influx of new high-net-worth individuals that are buying a lot of gold, and they are taking physical possession of it," said David Beahm, vice president of Blanchard & Co., one of the largest US retail coin and bullion dealers.

Investors have so far this month bought 131,000 ounces of American Eagles produced by the US Mint, more than tripled last year's November sales and marked the strongest November since 1998, data from the Mint's website shows.

November marked the second consecutive monthly rise after a dismal performance earlier this year. In October, the Mint sold 59,000 ounces versus 50,000 ounce in the same period last year. "This quarter is shaping up to be one of the best since the last quarter of 2008," Beahm said. Dealers also reported coin blanks buying by the US Mint as it was set to mint the 2013 American Eagle coins.

The Mint typically shuts its 2012 coin production in early December so it can start minting next year's which are usually highly sought after by coin dealers and collectors.

American Eagle silver coin sales in November rose to 3.135 million ounces, more than double last year's sales at 1.384 million. It was, however, slightly below October's at 3.153 million ounces. Political uncertainty due to a heated US presidential race and $600 billion automatic cuts in government spending and tax increases early next year have boosted gold investment, analysts said. Even though a recession resulting from the so-called fiscal cliff could severely undermine gold's inflation-hedge appeal, it is also likely to trigger a flight to quality investment such as gold amid economic uncertainty, trader said.

American Eagle gold coin sales tend to be highly seasonal, with the strongest performance at the start of the year as investors seek the newest edition. Sales are usually the lowest in the summer months and tend to pick up again in September in tandem with the start of the Indian wedding season and the lunar new year between January and February.