James Steel

Gold may be propelled even higher by a powerful combination of geopolitical risks, a softer USD, mounting fiscal deficits in the U.S. and other nations and monetary and economic policy uncertainty. The “fear of missing out” has attracted a new coterie of buyers which is injecting added volatility into the market. Heavy buying by institutional investors including momentum purchases may continue. Long positions on the CME are high but subject to liquidation. Trading may be characterised by wide ranges this year. Any escalation in risk could further aid gold, but conversely any event that lowers the geopolitical risk thermometer could undercut prices. Central banks should remain good buyers in 2026, but purchases may be below 2022-2024 peaks and limited by high prices. High prices are encouraging greater supply and reduced physical demand, notably jewelry, coins, and small bars in emerging markets which may weigh on price should risks recede later in 2026. Top three drivers: 1. Geopolitical risks 2. USD direction/monetary policy 3. Fiscal imbalances, growth in government debt

Silver has further upside based on tightness in the London market and extreme backwardation on the CME futures markets. As the year progresses, we expect this tightness to be gradually resolved by the migration of silver back from New York to London vaults. Industrial demand is weakening as price-related resistance lowers purchases. Large bar demand should rise, based on institutional purchases and coin and bar demand may partially recover but jewelry demand will be especially weak, though aided by crossover buying from gold. Exchange-traded funds are accumulating at a robust pace and may continue to do so. Similar geopolitical and monetary factors that support gold are also supporting silver. Mine supply, the possibility of increased producer selling and increased recycling will add to supply and may, along with reduced physical demand weigh on prices later in 2026. Any diminution of geopolitical or economic risks could also eventually weigh on prices.

We are positive on platinum prices. We expect the investment case for platinum will remain very solid in 2026 based on strength in gold and silver, which will encourage value seeking investors looking for hard assets and safe havens into platinum. We may see better than anticipated auto demand also as the upwards trajectory of electric vehicles may be flattening out. Jewelry demand should continue to recover after years of declines as platinum offers good value compared to gold. Non-auto industrial demand, especially for high technology applications, should be steady. Supply appears quite limited from the major producer South Africa as well as other producers. Despite the rally in prices, it may take years to feed into greater investment in the mines and hence greater output. Recycling may not also increase measurably, at least in the near term. We expect already notable production/consumption deficits to widen, thereby supporting prices.

We are less positive on palladium. Palladium will be especially supported by the slowdown in Electric Vehicle production and better than expected gasoline vehicles production, despite sluggish global aggregate auto production. The ongoing war in Ukraine – and the possibility that the Russian sanctions will persist for as long as the conflict continues – will limit palladium production from Russia. The same issues inhibiting South African platinum production will curb palladium production. Prices may have to remain high for a prolonged period before North America output recovers. Non-auto demand is modest but should be steady. Palladium may see only limited investment demand, but CME futures positions have turned net long after years of being net short. We expect production /consumption deficits to gradually narrow but for the market to remain in deficit, thus lending limited support to prices.