Heraeus Precious Metals Forecast 2021

Hanau (Germany), 27th of January

  • Gold remains on record course in Corona crisis
  • Silver likely to continue upward trend
  • Iridium and rhodium could reach all-time highs
  • High volatility increases demand for price hedging models

Gold prices are set to reach record highs in the new year, according to Heraeus Precious Metals, the world's largest precious metals processor. "We expect the recent price volatility in the precious metals markets to continue in light of the ongoing Corona crisis and the central banks' monetary glut," said André Christl, president of Heraeus Precious Metals, at the presentation of the annual precious metals forecast. Silver is likely to benefit from the strong demand from industry and the continuing investor interest and to perform even better than gold. The platinum group metals, which are heavily dependent on the automotive industry, are likely to remain at a high level with continued strong fluctuations. Some metals, such as iridium and rhodium, are likely to reach new highs.

The Heraeus forecasts at a glance:

Precious Metal Range per ounce
Gold 1760 to 2120 dollars
Silver 21 to 36 dollars
Platinum 850 to 1200 dollars
Palladium 1900 to 2900 dollars
Rhodium 15,000 to 25,000 dollars
Ruthenium 250 to 500 dollars
Iridium 2000 to 5000 dollars

Looking at the outlook for gold, Hans-Günter Ritter, long-time head of precious metals trading at Heraeus, expects jewelry demand in the key consumer regions of India and China to recover once the lockdowns are over. He has high confidence in the precious metal given low or negative yields on government bonds and the unprecedented fiscal and monetary stimulus. "It is very likely that the gold price will exceed its previous record high of $2072.50." The global economic stimulus programmes worth billions could have an impact on inflation in the medium term - gold as a classic inflation hedge should additionally benefit from this. The Heraeus experts expect a range of 1760 to 2120 dollars per fine ounce of gold.

Transition to a greener future helps silver

Rising demand from the solar industry should drive silver. In the fight against climate change, the new US President Joe Biden is counting on the massive expansion of this technology. This in turn should boost silver demand because the precious metal is used in solar modules. "The transition to a greener future holds considerable long-term potential for the silver market," Ritter said. The accelerated rollout of the 5G network in China, for example, is also likely to drive prices. Heraeus expects a range between 21 and 36 dollars per troy ounce.

For platinum, which is mainly used in diesel exhaust catalytic converters, Heraeus expects a growing surplus as supply rises faster than demand. "In the long term, however - from around 2025 - the hydrogen economy could emerge as an important platinum consumer," Ritter said. At that point, drying up mines in South Africa could also tighten supply - at which point the market could tip into a deficit. According to Heraeus, the range is between 850 and 1200 dollars per troy ounce.

Demand from China helps palladium

Palladium will still be in deficit in 2021. However, the gap should narrow as both primary and secondary supply recover from corona-related disruptions. Experts expect the gains to outpace a pick-up in demand from the auto sector. The automotive sector is the strongest customer with around 80 per cent - palladium is used in exhaust catalytic converters for petrol engines. China, now the world's largest car market, is the main source of tailwind. Since even stricter emission standards have come into force there, PGM loadings are likely to increase. On the other hand, demand from the chemical industry will probably decline. Heraeus puts the range at 1900 to 2900 dollars per troy ounce.

The price of rhodium, which recently rose to record levels, is likely to fluctuate strongly at a high level, according to Heraeus. "In view of the continuing high volatility, professional hedging of precious metals is playing an increasingly important role - demand here has risen in recent years," said HPM president Christl. The market deficit for rhodium should widen further this year. Demand from the automotive industry, by far the largest customer, is likely to remain high in view of stricter emission regulations. Here, too, the car market in China, which seems to be recovering faster from the Corona crisis there than in other regions, is helping above all. The price range for rhodium, which is mainly mined in South Africa, is $15,000 to $25,000, according to Heraeus.

After a recent rapid rise, iridium is likely to be in a price range between 2000 and 5000 dollars. The market is expected to show a slight surplus this year, as supply is recovering more strongly than demand. Mine production in South Africa, which provides 80 per cent of the world's iridium supply, will be at normal levels this year, according to Heraeus.

In the long term, the hydrogen economy will become an increasingly important customer. The increased recycling of iridium and precious metal-saving catalyst technologies offered by Heraeus Precious Metals promise relief. Ruthenium, which is mainly used in the electronics industry, has not followed the iridium and rhodium prices upwards. This could change in 2021: Experts see a price range between 250 and 500 dollars.