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Gold will continue its record chase

Heraeus Precious Metals Forecast 2024

Heraeus Precious Metals published the annual Precious Metals Forecast and provides an outlook on the development of gold, silver and the PGMs for 2024.

Gold Will Reach Record Highs

According to the world's largest recycler and trader of precious metals, Heraeus Precious Metals, the price of gold will continue to rise in the coming year and reach new records. "The growing confidence that the US Federal Reserve has ended its cycle of interest rate hikes and could start cutting rates as early as spring will drive the gold price," said Henrik Marx, Head of Precious Metals Trading.

Interest rate cuts make investments in interest-free assets such as gold more attractive and typically weaken the value of the dollar. A lower US currency generally supports the gold price. As the precious metal is predominantly traded in dollars, a weak greenback makes the precious metal cheaper on the global market, which ensures stronger demand and therefore higher prices. "Despite high yields on the US bond market and a strong US dollar, gold has done very well – this points to a clear upward trend." Ongoing purchases by central banks and ETF investors will also support the gold price. The strong demand for jewelery in India should also help. In addition, investors could turn to gold as a safe haven in view of the current crises. Heraeus expects a range of 1,880 to 2,250 dollars per troy ounce.

Silver Will Follow Gold and Rise

Heraeus also expects the price of silver to rise next year, but not as well as gold. Lower interest rates and a subsequently weaker US dollar should support the silver price. However, interest rate cuts usually indicate an ailing economy. Nevertheless, we expect demand for photovoltaics to remain high, particularly from China, but this alone will not be enough to offset the falling demand from the rest of the industry due to economic weakness. In addition, investors will react to the expected turnaround in interest rates by buying silver, as they did gold. Heraeus anticipates a price range of between 22 and 29 dollars per troy ounce.

Platinum Expected to Continue in Deficit

Despite a platinum market in deficit, the downward pressure from the weakening global economy is likely to keep the price in a similar trading range to this year. Weak demand from the jewelery industry does not promise to provide much support for the price either. The platinum price could only be supported by a shortage of supply, for example by closing unprofitable mines. At the current level, the metal, which is mainly used in diesel exhaust catalytic converters, is cheap compared to gold. A recovery in the price of gold could also help platinum to achieve a slight upward trend. According to Heraeus, the range for platinum is between 800 and 1,100 dollars per troy ounce. Heraeus expects prices to rise beyond 2024, partly due to increasing demand from the hydrogen industry.

Palladium Will Remain Under Pressure

The palladium price, which has been under severe pressure recently, is likely to fall further. Demand for palladium in the automotive industry – the largest customer at more than 80 per cent – is expected to fall. As a result, growth in car production is likely to slow in 2024. At the same time, electric cars will gain further market share. In addition, palladium is increasingly being replaced by platinum and used in petrol autocatalytic converters. All of these factors combined will lead to falling demand for palladium in the automotive industry. The falling demand will continue to put pressure on the palladium price next year. Heraeus puts the range at 700 to 1,200 dollars per troy ounce.

Rhodium Price Normalizes Ruthenium Price Weakens

The rhodium price, which is also heavily dependent on demand from the automotive industry, is likely to move in a range between 3,500 and 6,500 dollars per troy ounce. The range reflects a more "normal" rhodium market now that the price has reached the level it had before the price peaks from 2020 to 2022. Weaker year-on-year net demand is likely to put pressure on the rhodium price, although the risk of a reduction in supply due to possible closures of unprofitable mines in South Africa could offer some upside potential in the medium to long term. The country produces more than 80 per cent of the global rhodium supply each year.

The surplus on the ruthenium market is expected to shrink next year, while the weakening economy is weighing on the price. According to estimates, supply will decline due to the first small-scale shaft closures in South Africa. Although demand in the electronics and chemical sectors is likely to increase compared to the previous year, consumption will be below pre-pandemic levels. The Heraeus experts see a price range of between 350 and 600 dollars per troy ounce.

Fundamental Outlook for Iridium is Robust

The fundamental outlook for iridium remains robust. There is a risk that supply will be lower than expected. However, should the economic outlook deteriorate as expected, this could dampen the price. Minor declines in demand for spark plugs and electrical appliances will be offset by an increase in demand for electrochemical applications. The demand for iridium in the production of green hydrogen is growing. However, a new ruthenium-based catalyst developed by Heraeus for PEM electrolysis should help to reduce the pressure on the scarce iridium market in the coming years. Heraeus expects the price of iridium to be between 4,000 and 6,500 dollars per troy ounce in 2024.

Editor’s Note: Heraeus Precious Metals is a global leader in the precious metals industry. The company is part of the broadly diversified Heraeus Group, headquartered in Hanau, Germany and covers the value chain from trading to precious metals products to refining and recycling. It has extensive expertise in all platinum group metals as well as gold and silver. By 2025 Heraeus Precious Metals will be the first company in the industry that operates carbon neutral.

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