(Kitco News) – Gold prices will continue to rise, with geopolitics and emerging market demand providing upside risk, while silver and platinum prices will also appreciate but may underwhelm if industrial demand slumps, according to the World Bank’s Prospects Group.
“The World Bank’s precious metals price index climbed 9 percent in April 2024 (m/m), continuing its upward trajectory from the first quarter,” economists and analysts from the Prospects Group wrote in a recent post. “Gold reached a new nominal record in April, while silver approached its early 2021 record. Platinum prices also rebounded during the month.” They added that the price surge was fueled by heightened geopolitical tensions.
The World Bank expects the index to increase by 8 percent year-over-year in 2024. “Stronger gold demand from emerging markets and developing economies (EMDEs), amid heightened geopolitical uncertainty, is a key upside price risk,” they said. “Conversely, sluggish industrial activity in major economies could weaken demand, and hence prices, for silver and platinum.”
The World Bank noted that gold prices hit a nominal ATH of $2,331 in April, building on the 7% quarterly increase they posted in the first quarter of 2024, which in turn, is a continuation of the rising price trend that began in 2020.
“Recent price increases have been supported by strong demand from several EMDE central banks and increased activity in exchange-traded funds (ETFs) in China, amid heightened geopolitical uncertainty,” they noted. “As a safe-haven asset, gold often increases in price during periods of elevated geopolitical tensions and policy uncertainty. Record central bank buying—led by China, India, and Türkiye—bolstered gold demand in the first quarter of 2024.”
They pointed out that China’s central bank extended its gold purchase streak to the 17 consecutive months in March 2024, (a record which they have since added to in April). “In contrast, demand from the jewelry, technology, and investment sectors remained subdued in 2024Q1,” they said. “Gold prices are expected to be 8 percent higher in 2024 compared to 2023, supported by continued robust demand from EMDE central banks, retail investment (where gold jewelry serves as a quasi-investment in some countries), and strong safe-haven demand.”
Turning to silver, the World Bank analysts noted that the gray metal’s prices surged 12% higher in April compared to the prior month after seeing a stable and less dramatic Q1. “This recent increase in silver prices, mostly attributed to the recovery of industrial activity and some of the factors influencing gold prices, brought the gold-to-silver price ratio closer to its 10-year average,” they said.
The World Bank is projecting modest silver demand growth this year, “buoyed by industrial demand—from expanding vehicle electrification and the development of renewable energy infrastructure—as well as an expected recovery in jewelry and silverware demand.”
“An anticipated increase in mine production from key sources such as Chile, Mexico, and Russia is expected to support supply growth in 2024,” they wrote. “Silver prices are expected to increase 7 percent this year compared to 2023, with an additional 4 percent uptick forecasted for 2025.”
Platinum prices also experienced a rebound in April, though the 3.5% rise was more muted than the move seen in silver after the precious metal saw a slight dip in the first quarter.
“Following a 25 percent surge in demand in 2023, platinum demand is expected to moderate in 2024,” the World Bank said. “This anticipated deceleration is due to modest growth in the automotive sector and jewelry demand, which together accounts for about 60 percent of global platinum demand, offset by a contraction in industrial demand—mostly driven by the fiberglass and petrochemical sectors.”
“Nonetheless, platinum prices are likely to be supported by reduced production from Russia and South Africa, the world’s two largest platinum producers, as well as a drop in secondary (recycling) supply,” they said. “As a result, platinum prices are expected to increase by 4 percent 2024, with a further 5 percent increase anticipated in 2025.”
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