Gold prices have hit record highs, with spot gold reaching $2,449.89 per ounce. Silver and copper have also seen multi-year highs recently. While prices have slightly dipped, they are still near record levels, and analysts predict further strengthening over the next year. Factors like a weaker U.S. dollar, falling Treasury yields, and strong Chinese demand have contributed to the rally in precious and industrial metals, with UBS strategists forecasting gold to reach $2,600 per ounce by year-end.
Chinese demand for gold has surged, with the country overtaking India as the world’s largest buyer of gold jewelry in 2023. Chinese consumers bought 603 tons of gold jewelry in 2024, a 10% increase from the previous year. UBS raised its gold price forecasts based on stronger Chinese demand and soft U.S. economic data, which has led to expectations for rate cuts by the Federal Reserve. Silver has also benefitted from the bullish run in gold, with prices surpassing $31 per ounce to over a decade high last week.
While silver typically follows gold’s lead, it has seen increased interest from investors due to its positive correlation with gold prices. Silver is used for industrial purposes in automobile, solar panel, jewelry, and electronics manufacturing. Other precious metals like platinum, palladium, and rhodium are also expected to see supportive prices as they are in deficits this year. Copper prices have been supported by supply tightness, with production cuts at major mines contributing to the bullish sentiment in industrial metals.
Copper hit an all-time high of $10,857 per ton before retreating slightly to $10,256 per ton. The International Copper Study Group has reduced its supply surplus forecasts for the metal due to lower production levels. First Quantum Minerals and Anglo American have halted or reduced copper production, leading to expectations of supply constraints. Citi strategists predict copper to reach $12,000 per ton and potentially $15,000 per ton in the next 12-18 months, depending on factors like Fed easing and global manufacturing recovery.
Overall, the outlook for precious and industrial metals is positive, with strong demand from China, supply constraints, and a weakening U.S. dollar contributing to the rally. Gold, silver, and copper have all seen price increases, with analysts expecting further strengthening over the next year. Factors like political risks, Chinese demand, and supply shortages have all played a role in driving prices higher. Despite some fluctuations, the long-term trend seems to point towards higher prices for these metals in the near future.
