Heavy Metals – Which precious metals will rock our world in 2021?

The turbulent stock market year 2020 brought decent profits for investors in precious metals. And experts still see plenty of room for improvement in the precious metals market in 2021.

The price of gold has risen by around 25 per cent due to the uncertainties both in connection with the corona crisis in 2020 and the central banks’ monetary glut – similar to the rise in palladium. Silver has risen even more significantly. And things also went well for the most expensive metal, rhodium, last year: after plummeting from 13,500 US dollars to 6,000 US dollars per troy ounce in March 2020, rhodium picked up significantly in the following months. By the end of last year, more than 17,000 US dollars were due for a troy ounce of the metal, and in the new year, a new high was marked even beyond 21,000 US dollars.

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And the prospects on the precious metal market continue to be good, forecast the experts in the precious metals and commodities markets. 

Golden times ahead

Concerning the safe-haven investment gold, the experts almost all expect new record highs in the current year. It is assumed that the recent price fluctuations on the precious metal markets will continue given the ongoing corona crisis and the central banks’ money glut.

It is also very likely that the gold price will exceed its previous record high of 2,072.50 dollars. The experts see the potential recovery of jewellery demand from India and China, particularly as a price driver as soon as there is relief on the corona front. Besides, it is believed that low or negative government bonds yield should provide additional support for the gold price. The global stimulus programmes with which governments want to revive the economy in the post-corona era are likely to have consequences for the inflation trend – which in turn speaks in favour of gold as inflation protection.

Silver: Gold’s little brother accelerates

Silver, which plays a role primarily as an industrial metal, will probably also become more expensive in 2021. Market observers point in particular to the rising demand from the solar industry. A trend reversal towards green industry – supported by massive investments of the new US government under Joe Biden – could benefit silver. Therefore, the transition to a greener future holds considerable potential for the silver market in the long term, experts emphasise, citing the accelerated introduction of the 5G network in China, for example, as a second price driver. Against this background, analysts see the silver price in a range between 21 and 36 US dollars.

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Strong platinum demand expected

Since November, Platinum has been in a bull market even though the year 2020 as a whole was somewhat mixed. At the end of last year, the platinum price had benefited primarily due to the supply deficit. In addition, platinum investors are hoping for a recovery in jewellery demand from China and at the same time are betting that platinum will be used more in the automotive industry and could replace the expensive palladium in catalytic converters.

In the long term – around 2025 – the hydrogen economy could become a vital platinum consumer, experts expect. At that time, drying up mines in South Africa could also tighten the supply – then the market could tip over into a deficit. In line with this outlook, analysts see the platinum price in 2021 in a range between 850 and 1,200 US dollars per troy ounce.

Palladium remains expensive

Palladium is one of the most expensive precious metals on the market. In 2020, however, things went less well for palladium. Although there was a significant recovery after the corona crash in March, the precious metal has not yet returned to its pre-crisis price level. But in recent years the palladium price has been driven in particular by strong demand from the automotive sector.

For 2021, experts expect the gap between supply and demand to narrow increasingly. Both primary and secondary supply are expected to recover from the corona-induced interruptions, which will be exceeded by an increase in demand from the automotive sector. Tailwinds could come from the automotive industry, especially from China, while experts expect less demand from the chemical sector. The experts expect the palladium price to be between 1,900 and 2,900 dollars per troy ounce in 2021.

Rhodium expected to be highly volatile

The massive price fluctuations seen in the past for rhodium will in all likelihood continue in 2021. According to experts’ precious metals outlook, the price, which reached new record highs in January, will remain high. 

Continued strong demand from the automotive industry, where rhodium is increasingly used because of stricter emission regulations, is expected. Particularly from China, where the automotive industry shows faster recovery trends than in other regions, strong demand should be expected, according to the experts’ assessment. On the other hand, a larger supply deficit is to be expected. The precious metals experts see a range of 15,000 to 25,000 US dollars for the rhodium price in 2021.

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