Ross Norman

If 2023 was a year in which economics commanded headlines, then 2024 will likely see rapidly changing political landscapes, with record elections in prospect. For gold though, this is just another uncertainty and the stuff upon which it thrives.

Importantly, 2024 should register the high watermark in US rates with cuts negatively impacting the dollar and by extension, gold, positively. That said, if inflation proves stickier than expected and rate cuts are deferred, this may mitigate against runaway prices.

After strong official sector purchases in 2023, we see the trend maintained, but less so. Conversely, we see good physical offtake and less selling from institutions via the ETF compensating. The approval of the Bitcoin ETF is a negative factor and will take oxygen from the room for gold and with this endorsement, the competition between the asset classes gets real.

In short, we see a similar rising curve for gold to last year, but for different reasons; we see 2024 as a ‘goldilocks year – not too hot and not too cold, with a bias to the upside. Something for bears to ponder. We expect another 14% gain by year end, with gold nudging the $2,300 level.

Three key factors: politics; dollar, rates.

If, as they say, a rising tide lifts all boats, then if we are positive gold (and we are), we should be positive plus for silver. For sure, this boat has no hole in the bottom and its supply/demand fundamentals are supportive. The silver market looks set for yet another year with a significant supply deficit and with the cumulative effect of shortages starting to bear fruit in its price action, even though drawdowns are not yet critical. With mine supply set to edge lower by 2%, while industrial demand is expected to rise by 8%, silver is well placed to be the top-performing precious metal in 2024. As always though, strong price gains may well be moderated by the traditional price elasticity around investment demand, with dips bought and rallies sold into, preventing runaway prices.

We see a positive year ahead for platinum with an anticipated deficit of 350Koz in 2024, constituting 5% of the total platinum demand for the year. With this, above-ground stocks are set to decline to a four-year low, which again suggests the price risk is to the upside.

Mine supply is forecast to grow by 3% as the South African smelters have completed their scheduled maintenance, but there remain risks from the ongoing risk of electricity shortages, coupled with restructuring or possible closing of economically marginal operations.

Substitution of palladium with platinum in the auto sector is expected to continue not only with the price differential, but because of the inherent political risk associated with palladium, which is sourced primarily from Russia. We see a more modest increase in demand from the auto sector with fewer ICE vehicles being built, but with the impact moderated by tighter emissions legislation.

It’s a sad state of affairs when one of the most bullish factors for palladium is that the market seems to be almost universally bearish – leaving the upside open to a bear trap or short covering rally. But that would be temporary relief.

From a price peak of over $3,400 less than two years ago, palladium looks set to slide further, aided by scrap/recycling, generating a swing from a 200Koz deficit last year to a 300Koz surplus in 2024. And the bears are swimming with the tide. With the number of ICE vehicles in terminal decline and with platinum determined to take a larger proportion of the available pie, palladium remains plagued with large above-ground stocks (about 12Moz) and very few existing or new applications with the potential to consume it.

While palladium will likely benefit from smelter maintenance in Russia, the price is such that an estimated 25% of producers are doing so at a loss, which may well prompt supply cuts, reinforcing the mantra in commodities that the best thing for price weakness is price weakness. This may arrest the decline somewhat.