Debajit Saha

2025 may prove to be a challenging year for global policymakers as numerous issues are unfolding simultaneously. Geopolitical conflicts remain major concerns for international peace, while contrasting yield curves in the two largest economies – the US and China – along with the fear of a tariff war between these economic giants, will be central themes. The expectation that Trump will adopt a more liberal economic policy to stimulate growth could lead to higher inflation in the US, potentially prompting the Federal Reserve to maintain elevated interest rates. Conversely, record-low yields on benchmark bonds in China raise concerns about deflation among investors. Additionally, worries about European sovereign debt and slower consumption growth in emerging economies further complicate the landscape. Against this backdrop, we believe that gold will continue to uphold its reputation as a safe-haven asset, although we do not anticipate another rally of 25% or greater this year. Investors and central banks are expected to remain key buyers, while growth in the physical market may slow.

Silver is likely to maintain its momentum in 2025, driven largely by investment and industrial demand. In 2024, global investors demonstrated significant confidence in silver for asset diversification and recognised its potential as an industrial metal. The rapid increase in demand within the renewable energy sector has generated renewed interest in metals. The "go green" initiative is expanding beyond major economies, attracting interest from smaller countries as well. The transition to solar and other renewable energy sources will continue to benefit silver, although physical demand is expected to encounter some challenges.

Platinum prices are expected to remain stable, supported by slightly improved market fundamentals. In 2025, we anticipate a greater rollout of plug-in hybrid electric vehicles (PHEVs), especially in China and Europe. This shift is occurring as consumers show decreasing interest in pure battery electric vehicles (BEVs) due to the limited availability of charging stations on highways and a reduction in government subsidies in some markets. Initially, it was believed that the rising demand for BEVs would lead to a decline in the internal combustion engine (ICE) market in major economies. However, the trend indicates that consumers are opting for hybrid vehicles for their convenience, increasing the demand for platinum group metals (PGMs) as catalysts. Despite this changing market behaviour, it is unlikely to revive platinum demand, as BEVs are expected to continue dominating the market. Demand for platinum jewellery in the Asian physical market is likely to remain sluggish, as rising gold prices are attracting more consumers. In terms of other industrial uses, we believe growth will continue at a constant rate, as it has for over a decade.

Palladium prices are expected to remain flat in 2025, as ICE vehicles are predicted to lose market share to electric vehicles (EVs). Adding to the challenges of an already subdued price is the increase in supply from secondary sources. A significant volume of cars produced since 2013 will begin to reach the end of their life cycle in 2025, as stringent pollution regulations have resulted in higher platinum group metal (PGM) loadings, which can now be recovered and supplied back to the market.