Precious Metals Market Update

In today's webinar, we welcomed Ross Norman (CEO, Metals Daily), Jim Steel (Chief Precious Metals Analyst, HSBC), Joni Teves (Precious Metals Strategist, UBS) and Suki Cooper (Executive Director, Precious Metals Research, Standard Chartered) to discuss the recent trends in the precious metals markets and their outlook over the months ahead.

All were broadly bullish of the precious metals complex. Silver naturally dominated the conversation, and the analysts touched on some of those driving forces – the large investor demand that carried over from Q4 2020, the surge in retail demand and ETF buying, and a positive fundamental backdrop. While social media played a part, the depth and liquidity of the silver market was quite visible. Net short positioning in the futures market was quite light, so a short covering rally didn’t materialise. Despite all this early-2021 volatility, all remain bullish on silver’s outlook against a backdrop of supportive fundamentals.

Turning to gold, the mood was bullish but certainly lagging behind that of silver and probably a tad dampened versus our last analyst webinar in November. Joni and Suki expect physical demand to provide an important floor this year, helped by the cut to gold import duties in India’s budget this week, but Jim remains concerned that the ETF buying of 2020 will not be replicated. Nonetheless, there’s still reason to be positive with expectations of negative real yields and supportive macro and fiscal policy. Joni flagged that gold continues to have an important place in investors’ portfolios and expects a broadening of gold’s investor base.

Today’s webinar tied in with LBMA’s launch of our 2021 Precious Metals Forecast Survey. Double-digit price rises are forecasted for all four metals against 2020 actual average prices, but only modest gains are expected from early January 2021 levels. While the contributors all submitted their forecasts ahead of the past week’s volatility in the silver price, the white metal undoubtedly is the preferred metal; analysts are forecasting a price increase of 38% on 2020 prices and 8% higher than those in early January 2021.

4 February 2021