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Precious Metals Investment
Focus 2019/2020:
Forecast for Gold, Silver,
Platinum and Palladium

Metals Focus has released Precious Metals Investment Focus 2019/2020, its flagship annual report on investment in gold, silver, platinum and palladium. The report features comprehensive historical statistics and a forecast for 2019/2020. The following outlines the publication’s key findings.

Global economic and geopolitical backdrop will turn increasingly favourable to precious metals prices in 2020

Precious metals have enjoyed healthy price gains over the past few months as investor sentiment has improved noticeably. This in turn reflects a change in macroeconomic conditions which have increasingly favoured safe haven assets.

“Leading these changes has been a shift in Fed policy from a phase of tightening over 2015-18 to the two rate cuts it has made so far this year.” commented Neil Meader, Research & Consultancy Manager at Metals Focus, “It is clear that the risks over the next twelve months are skewed towards yet lower short- term rates in the US”.

Monetary policies have also loosened elsewhere, notably in the Eurozone. In addition, concerns about the outlook for some key economies have also grown, amid an escalating US-China trade war and the US’ increasingly aggressive stance towards other trading partners.

Another key theme has been the proliferation of negative-yielding debt. As a result, gold has rallied strongly since September 2018, with silver and platinum following suit this June. Palladium’s favourable fundamentals have helped it outperform and break through a series of all-time price highs.


Metals Focus believes that the macroeconomic backdrop will become increasingly favourable for gold investment in the coming months. This includes an end to sustained US dollar strength, further rate cuts by the Fed, more accommodative monetary policies from other major central banks, and the continued rise of negative-yielding debt.

“In spite of growing risk aversion this year, equities have remained near all-time highs and, seemingly, most investors are still not betting on a sustained correction,” added Neil. That said, the consultancy believes that investor sentiment will eventually change, encouraging increased allocations towards defensive assets, including gold.

Furthermore, tail risks seen in previous years are likely to remain in place over the short-to-medium term, including political instability within the US/Europe, as well as rising geopolitical tensions in the Middle East. Meanwhile, Chinese corporate and local government debt levels remain a concern and if anything are likely to get worse.

The investment case for gold is expected to strengthen further,” Neil added, “but we would caution that a full-blown economic and financial crisis is unlikely to emerge any time soon.” As such, the scale of the consultancy’s forecast price rally is restrained, with gold expected to rise by 8% to an annual average of $1,520 in 2020.

Metals Focus also caution that a deteriorating supply/demand backdrop may well put pressure on the upside for gold prices. A record level of mine output and a price-led rise in scrap will drive total supply to a decade-high in 2019, with growth carrying over into 2020. Lacklustre developments are also expected for demand. As a result, the structural surplus in 2020 is projected to double that of 2018 and the second-highest since 2010.


Metals Focus believes that a global economic slowdown and its negative impact on base metal prices will weigh on silver over the next 12 months or so. “On balance, though, silver is likely to benefit more from rising investment inflows into gold.” Neil added, “in early September, gold was only12% below its all-time high, while silver remained far below its $50 peak; given silver’s higher volatility, this leaves room for silver to outperform gold.”

These positive factors are likely to be partly offset by the weakness in the physical market, which is expected to see an ongoing structural surplus over 2019-20 at a broadly similar level to 2018. Mine production has recovered this year, with global output likely to return to its 2015 peak next year. Turning to silver demand, in spite of growing economic concerns, industrial demand and jewellery offtake are both forecast to post small gains over 2019-20.


Platinum is also expected to benefit from positive spillovers from gold. However, its sizeable and rising above-ground stocks will remain a key headwind over the rest of 2019 and in 2020. “Platinum is the only metal that is likely to record a year-on-year decline for the annual average price in 2019.” Neil also commented that “although the annual average for 2020 would be a four-year high, platinum’s discount to both gold and palladium are projected to continue widening.”

Record palladium prices, a steep rebound in rhodium prices and a weak currency have mitigated cost pressure in South Africa. Platinum output is likely to move sideways in 2019 and probably also over the medium term. This, along with record autocatalyst recycling, will keep total supply historically high over 2019-20.

Developments on the demand side will also remain largely disappointing. The scale of the recovery in autocatalyst demand will be modest, as gains from rising heavy-duty vehicle production and tightening emissions regulation will be partly offset by the ongoing slide in diesel’s share in the European light duty market. Besides, there will be little boost from jewellery and retail investment, with loss mainly from China and Japan, respectively. As a result, 2020 will see another physical surplus, for the fifth year in succession.


Palladium has been the best performer among four major precious metals during 2019-to-date. “Its remarkable gains reflect a generally tight physical market.” Neil noted that, “By contrast, investor activity has been limited.” Net longs on Nymex have remained stagnant this year, while ETP outflows have continued for much of 2019.

Even with a poor outcome in the Chinese and US auto markets, Metals Focus believes that palladium autocatalyst demand will rise over 2019-20, due to gasoline’s market share gains in Europe and higher loadings in response to tightening emission standards, especially in the likes of China.

Supply is also expected to grow over 2019-20 (led by autocatalyst recycling), but this will fall short of demand side gains. Overall, palladium will remain in a deficit, with above-ground stocks falling below 12Moz by end-2020. The consultancy also warns that the reduction in liquidity in the leasing market may well be more pronounced in the coming months. All these factors should continue to favour palladium prices over the next 12 months.

Editor’s Note: The London-based, Metals Focus is one of the world’s leading precious metals consultancies. The firm specializes in research into the global gold, silver, platinum and palladium markets producing regular reports, forecasts and bespoke consultancy. The annual Precious Metals Investment Focus 2019/2020 report analyzes the various options open to investors who are interested in gaining exposure to gold, silver, platinum or palladium. The report features comprehensive historical statistics and a forecast for 2019/2020. To purchase a hard copy/electronic copy of the report visit the online store at

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