(Agence Ecofin) – In addition to supply and demand, the prices of the main precious metals will depend heavily on the evolution of the dollar. A US Federal Reserve rate cut could weaken the greenback and benefit gold, silver and platinum amid geopolitical and economic uncertainty.
The expected slowdown in the global economy, the continuation of the Russian-Ukrainian conflict and high inflation levels are expected to negatively impact the prices of most precious metals in 2023, but a possible reversal of US monetary policy and the weakening The resulting dollar could boost gold, silver and platinum prices, trader Heraeus Precious Metals said in a report released last month.
The report points out that US Federal Reserve (Fed) rates are likely to continue to rise, although monetary policy tightening will be less aggressive than that seen in 2022 as inflation tends to recede and the US economy shows signs of slowing down. Even small increases in interest rates in the United States will make the dollar stronger and will not be favorable to gold prices.
Higher interest rates indeed improve the yield of certain financial products such as bonds, diverting investors from gold. As the yellow metal has no yield (it does not produce interest and does not generate dividends), it automatically becomes less attractive for investors.
But the slowdown in inflation observed in recent months in the United States and the deterioration in the growth outlook for the world’s largest economy could cause a change in the Fed’s monetary policy, which would go from increasing to maintaining or even lower rates. Following a possible slack in the greenback, bond yields would fall, which would allow gold to regain its status as a safe haven in a market disoriented by numerous geopolitical and economic uncertainties.
Given these various factors, Heraeus Precious Metals expects gold prices to move in a range of $1,620 to $1,920 per troy ounce for the current year as a whole.
For the silver, a moderate uptick in smartphone demand should support prices in 2023. Smartphone shipments are expected to rise 5% this year from 2022, to 1.3 billion units, with more sales of 5G-enabled devices.
In addition, demand for silver from the photovoltaic industry is expected to increase sharply in 2023, but that of silver jewelry is expected to decrease compared to 2022. However, the expected increase in silver mining production will limit the upside potential. the price of gray metal. The report also notes that the US Federal Reserve’s potential use of expansionary monetary policy could be a bullish factor for silver, with prices expected to trade in a range between $17 and $25 per troy ounce.
Cold snap on palladium, rhodium and ruthenium
For its part, platinum, whose prices fell in 2022 due in particular to the appreciation of the dollar against the South African rand, should benefit from a probable weakening of the greenback.
The supply of this metal used in catalytic converters for vehicles, but also in jewellery, watches and laboratory equipment will be in surplus in 2023 thanks to a 6% increase in production. Platinum prices will thus fluctuate between 800 and 1150 dollars per troy ounce this year.
Heraeus Precious Metals analysts are more skeptical of palladium in 2023. Metal prices are expected to suffer from both the adverse effects of oversupply and lower demand in the automotive industry, which usually absorbs more 80% of production. The loss of market share of combustion engines to the benefit of battery electric vehicles will indeed wipe out the gains from the expected recovery in the production of light vehicles. Although unlikely, sanctions against Russia and its commodity exporters could, however, cause pallidum prices to rise, with prices expected to move in a range of $1,300 to $2,250 per troy ounce.
The report also reveals that the outlook for rhodium, which is also highly dependent on demand from the automotive industry, is rather negative. As global demand is not expected to change much, the recovery of primary production in South Africa is expected to result in excess supply. Rhodium prices are again expected to move in a range of $9,000 to $15,500 per troy ounce in 2023.
For ruthenium, the return to lower price levels should continue this year. Heraeus Precious Metals expects a price range between $400 and $650 per troy ounce. The supply of this metal mainly used in the electronics industry is expected to show a slight surplus in 2023.
The outlook for iridium is positive. The demand for this metal is indeed set to increase from this year, due to its growing use in the manufacture of electrolyzers needed for the green hydrogen industry. At the same time, production in South Africa, which accounts for around 80% of global iridium supply, is expected to increase only slightly. Consequence: the prices of this metal should increase in 2023 to move within a range of 3700 to 6500 dollars per troy ounce.
Summary table of forecasts for the development of precious metal prices in 2023
| precious metal | Price range expected in 2023/once troy (en dollars US) |
| Or | 1620 to 1920 |
| Argent | 17 to 25 |
| Platinum | 800 to 1150 |
| Palladium | 1300 to 2250 |
| Rhodium | 9,000 to 15,500 |
| Ruthenium | 400 to 650 |
| Iridium | 3700 to 6500 |