Kieran Tompkins

US inflation is slowing sharply, owing to easing global supply shortages and an expansion in the supply side of the economy. With core inflation likely to reach the 2% inflation target by the middle of the year, we think the Fed will begin to cut interest rates by the end of Q1. Despite a slight pullback at the start of this year in investors’ expectations for interest rate cuts by the US Fed, we think they are mostly priced in. Consequently, any further boosts to the gold price from investment demand will be limited. So while we expect the price to rise over the course of this year, any increase is likely to be small. Moreover, the historically high price of gold is likely to deter any significant increases in physical demand.

The three most important factors impacting the gold price will be: loosening monetary policy in the US; geopolitical risks surrounding tensions in the Middle East; and central bank demand.

We think the silver price outlook is bright in 2024. Although interest rate cuts by the US Fed are mostly priced in by now, they will still provide a small prop to silver this year. We also think silver will be buoyed by a recovery in global industry, led by rate cuts in advanced economies, and an increase in industrial metals prices with which silver has historically been positively correlated. What’s more, there are signs that the downturn in the global electronics sector, a major silver consumer, has run its course, and we expect it to make a positive contribution to demand this year. Finally, we think that as the green transition kicks into gear, the silver price will benefit, given silver’s intensive use in products such as solar panels.

The platinum price is forecast to rise a little over 2024. There will probably be a small boost from investment demand amid interest rate cuts by the US Fed. Moreover, rate cuts in advanced economies should spur global vehicle production to another year of strong growth. However, there are several factors that may offset these tailwinds. Rapid rollouts of electric vehicles in key markets will chip away at total platinum demand. Meanwhile, primary supply issues in South Africa, which have been a key prop to the price for over a year, might ease as private power projects and solar panel installations boost power output. On balance, we think the platinum market will be in a small deficit this year.

After coming under heavy downward pressure in 2023, we think the palladium price will do better this year. After rebounding last year from supply chain shortages, vehicle production growth is likely to remain high this year as rate cuts in advanced economies spur demand and output growth. However, the link between growing auto production and rising palladium demand will weaken due to the rapid rollout of electric vehicles in key markets. Accordingly, we expect only a small increase in the price this year, which will keep the price a long way short of highs in recent years.