Rhona O'Connell

After a year in which gold amply fulfilled its role as a mitigator of risk and a mirror to uncertainty, it looks as if it faces more of the same in 2025. Indeed, while the start of 2024 brought many projections of geopolitical uncertainty, not least due to over 50 elections with half the global population having the chance to vote, the start of 2025 arguably sees even more uncertainty than twelve months previously. The new political tapestry is not fully woven, and the pattern is not fully formed. Uncertainty and geopolitics are likely to remain the key drivers, with the dollar and interest rate differential taking something of a back seat, while high deficits and contracting fiscal headroom in a number of economies are taking an increasing role. That said, much of this is already priced in and the last lap is always the hardest. It looks from here as if 2025 will see the peak in the dollar gold price. The timing is hard to call, but the third quarter looks like a feasible target.

Silver is in a phase of exciting transition. It remains closely allied to gold, of course, but the green revolution favours silver more strongly than a number of other mainstream metals. If we look at silver’s fundamentals without any investor activity, then since 2011 overall supply has exceeded industrial fabrication levels (including jewellery and silverware) by just under 80,000t, but investors were more than equal to the task and bought approximately 106,000t over the period (figures calculated from Metals Focus numbers). Therefore, it has arguably been in a surplus that investors have absorbed. During 2024 it moved into a pre-investment deficit that is set to widen for the foreseeable future, and this will give it longer-term independence, to a degree at least, from gold. For now, though, its industrial profile leaves it vulnerable to the vicissitudes of the European and Chinese economies, given that supply is largely price inelastic. There will, of course, be volatility – it’s in the nature of the beast – and 2025 may be something of a struggle until the shadows over the European and Chinese markets start to recede. A run towards $40 is entirely possible, but it would in all probability be one of those silver Cinderella moments – gone in the blink of an eye.

Although the transition towards electrification in the auto sector casts a pall over platinum’s longer-term demand profile, the prospect of fuel cell growth and the continued resurgence of platinum jewellery should lead to higher prices this year and it looks as if it could be the outperformer of the four metals. The jewellery picture is interesting in that for many years most people have had a strict allegiance either to a white metal, or to the yellow one. Price discovery has now overtaken that, however, fuelling renewed interest, notably in China. On the supply side there is still the possibility of disruption as the nickel, palladium and rhodium prices have vastly reduced by-product credits at the South African platinum and Russian nickel mines. While there may not be suspensions of output on that basis, capex has certainly been affected, and the supply profile has shifted accordingly. Platinum is in a deficit and will remain so, helping to underpin a rising price profile.

Palladium remains the poor relation among the precious metals. The shifts in the green transition, with aspirational target dates under threat, consumer resistance, sluggish infrastructure development in places and price discovery all contributing to potential slippage in deadlines. The initial evidence of the fluidity of the change was clear in 2024 with the plug-in hybrids stealing the thunder of the battery-electric vehicles. This has favoured all three major PGMs, especially as the loadings in PHEV internal combustion engines are higher than those in ICE cars. This is but a stay of execution, however, and unless there are significant technological developments over the next few years, palladium continues to face a sombre future. This is informing investor activity, as evidenced by the massive short positions that have rolled in and out of the market over the past twelve months. In early 2025 they are again vastly extended, and this clearly offers the possibility of a change of range on the back of a short covering rally (the speed of the move in 2024 when Stillwater announced a partial closure and restructuring is a case in point). It is also interesting to note that ETF holdings have been increasing, probably on the back of the uncertainty of the vehicle fleet, so palladium has potential short covering on the one side and possible stale bull liquidation on the other.