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(Kitco News) – The bullish run on precious metals is expected to continue until 2021, with double-digit gains across the board, according to analysts participating in the London Bull Market Association (LBMA) annual price forecast report.
Thursday, in its annual report, the LMBA said 38 market analysts participated in this year’s forecast survey. Gold prices are expected to average $ 1,973.80 an ounce, an increase of 11% over the 2020 average. However, the outlook is for only a modest 4.5% increase over the average price of gold. first half of January.
“Gold is expected to be subject to a high level of volatility in 2021, with broader forecasts predicting a high / low range of $ 1,192 compared to $ 780 in 2020,” said the LBMA in the report.
With the expectation that the gold market will be relatively domesticated by 2021, LBMA said it expects all eyes to be on silver. Precious metals analysts expect silver prices to average $ 28.50 an ounce this year, up 38% from the average price in 2020 and 8% from the average price since the first half of the year of January.
The volatility seen in the silver market last week may foreshadow the price action for the rest of the year.
“Silver is undoubtedly the star of the show,” said LBMA. “Silver is forecast to be the best performing metal in 2021, but with a trading range of $ 38.5, almost five times last year’s forecast, it looks like it’s going to get on a real roller coaster in 2021. . “
Looking at the Platinum Group Metals (PGMs) market, analysts expect to see a reversal of luck between platinum and palladium. Analysts believe the platinum average is 2021 at around $ 1,131.50 an ounce, an increase of 28.2% over the average price in 2020.
Meanwhile, analysts expect palladium prices to average around $ 2,439.10 an ounce this year, an increase of more than 11% over last year’s average price.
“The market was in love with palladium last year, and he proved to be the best artist, posting an impressive 52% increase in price in 2020. But analysts are predicting that it will be the worst performing metal this year,” said the LMBA .
As for the important factors driving prices for precious metals in 2021, the report noted that 25% of analysts said low to negative interest rates would be positive winds for gold, silver and PGMs.
At the same time, 21% of analysts said that a weaker US dollar would support higher prices for precious metals, and 16% are observing the Federal Reserve’s extremely accommodative monetary policies.
Looking at the most optimistic and bearish forecasts. Thorsten Polleit, chief economist at Degussa, is the most optimistic about gold, as he expects prices to rise to $ 2,300 an ounce.
“The bullish gold market is expected to continue not only in 2021, but far beyond. A large number of factors are at work to push the price of gold even higher. To avoid the consequences of the politically dictated blocking crisis, banks central banks around the world will keep interest rates artificially low and expand the money supply at unprecedented growth rates, “he said to support his optimistic outlook.
René Hochreiter, an analyst at Noah Capital Markets / Sieberana Research, is the most bearish in the gold market, as he expects the improvement in economic conditions to weigh on the precious metal. He said he saw the price of gold drop to $ 1,590 an ounce this year.
“After the fastest recovery in the history of global stock markets, gold may decline equally sharply as risk and volatility decline,” he said.
Polleit is also the most optimistic analyst for silver prices. He said he sees silver rising to $ 55 an ounce this year.
“Over the past two years, the price of silver has benefited, as investors have increasingly increased their exposure to silver through ETPs. This trend is more likely to continue – especially in the ultra-low interest rate environment, ETPs products offer institutional investors opportunities for return and diversification, ”he said.
Frank Schallenberger, an analyst at LBBW, is the lowest in silver. He sees prices dropping to $ 16.51 an ounce this year. He noted that he does not expect investment demand to be as strong as it was in 2020.
“The reason for the good performance of silver in 2020 was the extreme purchase of ETCs. This will not be repeated this year. And the fundamentals of silver don’t look very good. Industrial demand, as well as jewelry, will take some time to come back, “he said.
Looking at platinum, Glyn Stevens of MTSS UK is the most optimistic about industrial precious metal. He said he sees prices hitting $ 1,827 an ounce this year.
“2021 may well be the year for platinum to take center stage in the world of precious metals. Not only is demand expected to exceed supply, but the green hydrogen revolution is coming and platinum’s role in this revolution is crucial,” he said.
On the other side of the market, Schallenberger is the biggest bass player in the platinum market, as he sees prices dropping to $ 774 an ounce.
“The fundamentals still don’t look very good for platinum! The surplus on the market is here to stay and the triumphant advance of electric vehicles will make platinum demand for catalysts even lower,” he said.
Although palladium is expected to be the worst performing asset in the precious metals sector, there are several bullish forecasts for this year. Six analysts believe palladium prices reach $ 3,000 an ounce.
Bank of China ‘s Zhexing Wang is palladium’ s biggest bass player, seeing prices drop to $ 1,500 an ounce.
“Palladium still faces great uncertainty in 2021. Palladium is more expensive than platinum, but it is likely to be replaced by platinum in industrial use, and the price difference between palladium and platinum may continue to narrow,” he said.
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