(Kitco News) – The dismal start of the gold market until 2021 may just be the start of a longer-term downtrend as the World Bank predicts lower prices for 2021 and 2022.
In its April commodities report, the international financial institution said it expects gold prices to average around $ 1,700 an ounce this year. Analysts expect the average price of gold to fall to $ 1,600 in 2022.
The outlook for World Bank gold comes as prices struggle to find enough bullish momentum to hit $ 1,800 an ounce. June gold futures last traded at $ 1,787.50 an ounce, up 1% on the day.
Gold’s poor performance so far this year is even more surprising compared to the overall commodities market.
“Almost all commodity prices are now above their pre-pandemic levels, and some commodities, especially metals, are well above their previous levels – copper prices were almost 50% higher in March 2021 compared to the end of 2019. The recovery has been driven by improving global economic prospects, aided by significant monetary and fiscal stimulus in advanced economies, and by stable vaccination rates, although unequal, ”analysts said in the latest commodities report.
Looking at the entire metal complex, the World Bank said it sees prices rise 30% this year with a correction in 2022 as the global economy begins to normalize. By comparison, analysts expect gold prices to fall 4% this year as investment demand weakens due to the improving economy and rising bond yields. .
“Higher real yields make gold less attractive to investors. Holdings of gold-backed exchange-traded funds have also fallen sharply in recent months, and central banks have cut back on their gold purchases. Physical demand is recovering from a substantial decline in 2020 but remains well below pandemic levels, ”analysts said.
However, the World Bank noted two silver liners in the precious metals market.
Analysts said they expected silver prices to rise 22% this year. Improving industrial demand for silver should help average prices around $ 25 an ounce this year. The bank sees prices drop in 2022, averaging around $ 22 an ounce year round.
“Prices were raised by a rebound in industrial demand (electronics, cars and solar), which represents more than half of silver consumption (against less than 10% for gold). Investment demand has also been robust, with investors holding net long positions since mid-2019, ”analysts said.
Silver continues to outperform gold prices. July silver futures last traded at $ 26.495 an ounce, up 2.40% on the day.
The World Bank also sees potential for platinum prices. They noted that prices rose 24% in the first quarter. They added that they were forecasting a 25% price hike this year.
“Demand for jewelry rebounded, while demand from the automotive sector was supported by a strong recovery in automotive manufacturing. The implementation of stricter emissions standards in China and Europe has boosted the use of platinum in autocatalytic converters, ”analysts said.
Platinum prices are expected to average around $ 1,100 per ounce in 2021. For next year, prices are expected to average around $ 1,110 per ounce.
July platinum futures last traded at $ 1,222 an ounce, up more than 1% on the day.
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