Andy Habluetzel

Growing geopolitical uncertainties across Asia, the Middle East and Europe will continue to support the gold price throughout 2024 and we expect to see a test of $2,150 per ounce during the first half of the year. Notwithstanding, it has been clear for several years that Western investors no longer hold the precious metal in the same regard as they once did, when it comes to gold as a safe-haven asset. This was further confirmed in 2023 by the strong physical gold sales of bars and coins by private investors and the ongoing outflows that can be seen on all major gold ETFs over the course of the year. We believe that investor demand for gold will continue to decline in 2024 if we do not see any heightened geopolitical unrest.

It should be noted that expected rate cuts by the US Fed are already reflected in today’s gold price, which was one of the main drivers behind the price rally seen in Q4 2023. As such, the impact of four rate cuts, totalling 100 to 150 basis points, will be negligible.

The key drivers for higher prices this year remain the ongoing gold purchasing by central banks that divest mainly their US dollar and other fiat currency holdings, as well as the growing threat of a possible multi-year recession. The increasing likelihood of further escalation or even a new conflict in Asia or Europe will also continue to be supportive.

Despite gold’s strong performance in 2023, the silver price closed the year almost flat. The key reason for silver’s lacklustre performance is that a growing number of investors classify it only as an industrial asset and no longer categorise it as a financial instrument. As a result, its main demand driver is still the industrial sector and, consequently, the silver price is more a reflection of the weakening economic situation rather than factors such as geopolitical or financial market influences. Analysing the fundamentals, an unchanged ratio of 50% of the annual silver production being used by the industrial sector was also not supportive of a higher silver price.

With the expectation that demand for solar photovoltaics will continue to rise in 2024, we forecast a stable and slightly higher silver price over the course of 2024. However, continued weak investment demand will remain a headwind for the silver price, especially as some silver investors who have remained loyal to silver over the past few years unfortunately sold their silver holdings in ETFs, bars and coins during 2023 as they lost their interest in the white metal.

We expect platinum prices to remain depressed in 2024. Due to the weak demand during 2023 and the continued price weakness over the last five years, several refineries and mines curtailed platinum production to processing only small quantities or halted it altogether to focus their resources instead on the lucrative gold market. A counterbalance to the price collapse and hope for stable platinum prices in 2024 could be the fact that demand from the automotive industry is increasing and we should assume that we will have a deficit in platinum production in 2024. This is also due to the indications that Russia will extract less platinum and that South Africa will not be able to maintain its already low production output.

The sharp palladium price fall in 2023 by over 35% of its value is now presenting the same picture as in the platinum industry. Due to the base costs of palladium extraction, many refineries and mines have been forced to cease production. It can be assumed that further producers will temporarily cease their palladium production during 2024. The low demand from the industrial sector leaves little hope that we will see higher prices in 2024. Therefore, we expect palladium to trade inside a tight price range during 2024.