Commodities outlook for 2011: $100 oil and $1,500 gold

NEW YORK (CNNMoney) -- Commodity prices had a stellar 2010 and experts expect that momentum to carry over into this year, but at a more measured pace.

On average, investment strategists and money managers are predicting oil prices will rise 4% and gold will edge up just 1% by the end of 2011, according to an exclusive CNNMoney survey.

That may seem like a decent increase but consider where prices ended last year. Oil prices rose 15% and gold gained 30% in 2010. In fact, it seemed like gold was setting almost daily records during the second half of the year as the dollar remained under pressure and investors remained wary about the economic recovery.

But 2011 is a new year and the recovery looks like it's on track to keep chugging forward, so don't expect to see a repeat of those lofty gains this year.

Experts are a bit more bullish about oil than gold, with more than a third of the 32 survey respondents predicting $100-a-barrel crude prices by the end of 2011. Nearly half of those surveyed think gold will rise at least 7% to $1,500 an ounce by year end.

Much of the gains will be driven by demand from emerging markets like China and India, where rapidly growing economies are spurring on demand for certain commodities, said Sean Kraus, chief investment officer at CitizensTrust. He's calling for $102-per-barrel oil and $1,550-per-ounce gold this year.

"As emerging markets continue to grow and build more roads, highways and other infrastructure, the demand for oil and refined products will rise," Kraus said. "A middle-class is also forming in India and China, and as those individuals get wealthier, they will want some exposure to gold, not only for its investment value but because it is historically a significant part of their culture."

Despite that increasing demand, some experts are taking a much more cautious stance.

"We're going to see demand rise thanks to economic growth around the world, but I think we will be surprised by new oil supplies coming out of Iraq and Western Africa that will offset that," said Bel Air Investment Advisors portfolio manager Gary Flam. He thinks oil may spike above $100 during the first half of the year, but will finish off slightly lower at $85 per barrel.

And Flam sees gold prices dropping to about $1,250 per ounce by the end of 2011.

"Gold prices have climbed from below $300 to more than $1,400 per ounce, and have risen for 10 consecutive years. There's a need for a rest," Flam said. "I also think that we're starting to see the underpinnings of strong economic growth that is not boosted by the government, which will start to reduce the fear-based demand for gold."

Improving confidence in a sustainable economic recovery should lift the value of the dollar, and a stronger buck would keep commodity prices at bay since many of them are priced in dollars, Flam said.

However, about half of the investment experts surveyed think the dollar will decline during the year, and that may wind up being another supportive factor for oil and gold prices.

"We have a huge national budget deficit that we haven't seen much progress on, and the debt problem in states could also accelerate," said Avalon Partners chief investment officer Peter Cardillo, adding that both factors could weigh on the dollar, and push commodity prices higher -- as high as $1,800 for gold and $115 for oil in the first half the year.