Our 2023 outlook for precious metals

Gold could perform relatively well in 2023 even though real US rates are significantly less supportive than in previous years. While US real rates may not move much higher than their current levels (1.5% on 22 December), they are likely to remain well into positive territory in 2023, making the gold price expensive relative to real rates alone. But investment demand for gold is also driven by US dollar trends, the fear of high inflation and global uncertainties. In particular, our expectation for some weakening of the greenback should help gold. Our 12-month projection stands at USD1,880 per troy ounce.

As for silver, in the short term we see limited scope for physical demand to keep up its recent momentum, with a downturn in major economies would likely exacerbate downward pressure on prices. But longer longer term, we see silver as capable of outperforming gold based on improving industrial demand. Besides a potential global economic recovery later in 2023, structural demand linked to the energy transition should lend strong long-term support to the price of silver. Our 12-month estimate if for USD25.0 per troy ounce.

We think that platinum’s recent outperformance of palladium has further room to go. Apart from the fact that platinum prices are still at a decades-low level, market conditions for palladium are likely to deteriorate in the coming years due to the decline in cars using internal combustion engine cars (palladium is used in autocatalysts) relative to electric vehicles. While there are significant uncertainties, there are no signs of any decline in Russian production of palladium. Platinum looks more attractive from a structural viewpoint because of its more varied use. Our 12-month estimate stands at USD1,150 per troy ounce for platinum and at USD1,700 for palladium.