Julia Du

Gold prices will benefit from a favourable environment in 2024, driven by expectations of lower interest rates: the Fed’s projections implied a 75 bp rate cut in total next year with three rate cuts bringing the Fed Funds rate to 4.5% to 4.75%. Besides, the shift in the US central bank’s monetary policy will also weigh on the dollar. On the other hand, improved risk appetite among investors and growing optimism over a soft landing in the US economy are bearish factors for gold prices as they could dent demand for safe-haven assets. Potential downside risks on gold prices also exist if the Fed’s rate cuts are delayed. Our forecast assumes that the conflict between Israel and Hamas is not likely to spread more broadly across the Middle East. On that basis, our forecast positions gold prices to fluctuate between $1,800 and $2,300, averaging $2,125, with limited upside potential given historical highs.

Silver demand, fuelled by photovoltaic applications and industrial segments in 2023, is expected to strengthen again in 2024. Projected Fed interest rate cuts may boost economic growth, increasing silver demand. The correlation with gold, especially when gold becomes expensive, is likely to elevate silver prices. Additionally, support from a weaker dollar due to expected lower rates and less dovish stances by the ECB and BOE could help silver to touch $30 in 2024.

We expect platinum demand to move higher in 2024 as supply chains recover. Potential rate cuts and improved sentiment may lead to a soft landing in the US economy, boosting auto sales and platinum consumption. The substitution of platinum for palladium also drives up platinum consumption. Platinum supply remains constrained amid aging mines, with few new mines under construction. In addition, power cuts and strikes in South Africa, and potential North American mine closures could pose challenges to platinum mine output.

Although the dovish shift of the Fed’s monetary policy is set to improve the economic outlook in the US and boost auto sales, the substitution of platinum for palladium in autocatalysts poses the greatest headwind to demand next year, along with BEV adoption. The recent price rally supported by broader concerns about palladium supply disruptions on the back of expanded UK government sanctions on Russian metal has already faded as the measures didn’t directly target palladium. South Africa’s supply constraints have a limited effect so long as Russian metal is still available to the global market.