Keisuke (Bill) Okui

Gold is expected to go higher as the investment demand from central banks and private sectors is expected to continue in 2024. The uncertainties ahead, especially between the West and the rest of the world, make this trend accelerate.

Although it is recently being said that gold moves in line with the rest of the traditional assets, it is still not quite one of the most highly correlated, hence, continued investment demand can be expected.

A rally in the gold price despite the higher interest rates, especially over the last 12 months, gives us an impression that even with a higher interest rate, this metal could move higher. As interest rates are expected go lower, gold can be thought as one of the most favourable assets.

The downside scenario for gold we believe is a less severe economic recession than we currently anticipate, which may cause another period of inflation and so higher interest rates. Also, in the case of a faster pace of tapering by Fed, we may see a large collapse with this metal.

Three most important factors I think will impact on the gold price in 2024: amount of central bank purchases; decoupling of the West and the rest of the world; interest rates.

Silver is expected to go higher by following the gold price as investment demand grows. But because of the lack of buying from the central bank sector, silver cannot quite climb in line. The upside potential is in the Indian and Thai markets, where individuals purchase silver jewellery and silverware instead of gold, as gold is too expensive for many people. Physical demand from electronics and the solar power sector is expected to continue, but slower economic growth or slower sales of the cars may weigh on silver demand and price. Also, if the difficulties of the Chinese property market continue, this could be a large negative factor, as solar panel demand from the housing market is not negligible.

Platinum is expected to go higher from both a supply and a demand perspective. Demand from the hydrogen-related economy can be positive, although this shall not cause a spontaneous price rise as it comes into effect slowly. On the supply side, as many market participants are paying attention to, South African production may be affected due power supply issues. On top of this, there are less incentives for mining companies to expand their production while PGM prices are decreasing. The downside risk for this metal is a possible liquidation from investment, and the electrification of heavy-duty vehicles. As sales of EVs are overtaking sales of light-duty vehicles more quickly than expected, the same could happen with heavy-duty vehicles in the near future.

Palladium is expected to go higher due to some short covering from the speculative positions on CME and from a too pessimistic view on the auto sector. Market participants have been fairly negative on the palladium price lately and they were quite right about it, but its speed was too quick, especially in the last few months, considering the fact that it is being said that the peak of palladium demand from auto sector is around 10 years ahead. Looking at the recycling sector, the more the price goes higher, the more selling to the market can be seen, which is likely to cap the price. The downside scenario is just like platinum, due to the further shift to EVs and fewer sales of light-duty vehicles.