Kieran Tompkins

We expect gold to make further gains this year, due to strength in ‘non-traditional’ gold demand drivers. Demand from central banks will remain strong; there is still plenty of scope for central banks in China’s sphere of influence to continue adding to their gold reserves. Meanwhile, the relative attractiveness of gold as an investment amongst Chinese investors might increase against a backdrop of a structurally slowing economy and poor returns from other asset classes. That said, it is unlikely to follow up a banner year for gold in 2024 with similarly massive gains. After all, the strength of the US economy and resilience of the labour market, particularly relative to other major economies, should provide a check on the gold price if it continues to pile upward pressure on Treasury yields and the US dollar. President Trump poses the major wildcard to the gold market in the year ahead. On the one hand, the imposition of tariffs could prove a headwind to gold prices via a stronger US dollar. But on the other hand, his plans for tax cuts in the context of increasing concerns over fiscal sustainability could support gold given its role as an inflation hedge. Three most important factors: 1. Central bank buying 2. Concerns around US fiscal deficit 3. Strength of the US economy

We expect this year will be one of subdued price rises for silver, with the price getting caught between two opposing drivers. On the upside, the silver price should benefit from additional increases in the price of gold this year. However, silver’s extensive use in industry and, subsequently, the close correlation between the silver price and industrial metals prices, could prove a significant headwind due to the bleak backdrop for the latter owing to China’s property crisis.

The rollout of electric vehicles (EVs) will weigh on demand for platinum. Admittedly, the take-up of EVs in the west is in the midst of stalling and greater use of hybrid vehicles will be supportive of platinum. But EV sales in China have surged and, in any case, even non-EV sales are unlikely to strengthen much amid interest rates staying higher for longer, limiting any boost to platinum demand. The supply backdrop should benefit from South Africa’s mining sector returning to growth in 2025 as well as growth in recycling.

We also anticipate the rollout of electric vehicles (EVs) to be a major headwind to demand for palladium. Admittedly, the take-up of EVs in the west is in the midst of stalling. But EV sales in China have surged and, in any case, even non-EV sales are unlikely to strengthen much amid interest rates staying higher-for-longer, limiting any boost to palladium demand. On the supply front, the risk of US sanctions that have been threatened in recent months or self-imposed limits on Russia’s exports of palladium is a key upside risk to prices.