Heraeus Precious Metals Forecast 2022: Gold and silver should benefit from inflation concerns

Hanau (Germany), 25th of January

  • Gold could reach new high
  • Silver likely to outperform gold
  • Record demand for palladium from the automotive industry

The price of gold could reach a record high in the new year, according to Heraeus Precious Metals, the world's largest precious metals service provider. "Gold remains a safe haven and an insurance against geopolitical risks, and the risk of persistently high inflation is also positive for gold," said André Christl, CEO of Heraeus Precious Metals, at the presentation of the annual precious metals forecast. In addition, a weaker dollar should support prices. The Heraeus experts see a range of 1700 to 2120 dollars per fine ounce of gold. Gold marked its previous record high in August 2020 at around 2072 dollars.

Heraeus expects industrial demand for silver to grow. Double-digit growth in the installation of photovoltaic systems is forecast for 2022. At the same time, silver demand from electronics will benefit this year from an increase in global smartphone sales, as well as from the continued rollout of 5G and the falling cost of 5G devices. In terms of demand for silver jewelry and silverware, Heraeus expects a return to pre-pandemic levels. Mine production, on the other hand, is expected to fall in 2022. If inflation and the weak dollar do indeed support the gold price, silver should outperform gold in these waters. Heraeus expects a range between 20 and 32 dollars per troy ounce.

The Heraeus forecasts at a glance:

Precious Metal Range per ounce
Gold 1700 to 2120 dollars
Silver 20 to 32 dollars
Platinum 850 to 1300 dollars
Palladium 1400 to 2250 dollars
Rhodium 7500 to 22,000 dollars
Ruthenium 250 to 600 dollars
Iridium 2500 to 5000 dollars

Platinum group metals are still stabilizing after last year's supply and demand side shocks from, for example, mine flooding in Russia, plant maintenance in South Africa, and lower automotive production from chip shortages. The Corona pandemic remains a factor. However, the impact should begin to fade. After all, vaccines are widely available. In addition, the new covid variants appear to be less dangerous. This should allow a gradual return to normalcy.

The industrial platinum market (excluding investment) remains significantly oversupplied. When the price declined last year, ETF investments fell. Without renewed buying interest from investors, it is difficult to imagine a price increase, according to precious metals experts at Heraeus. Platinum, which is used primarily in diesel exhaust catalytic converters, is still favorably valued compared to gold and palladium. However, a high inflation rate could make tangible assets such as platinum attractive to investors again. The broad industrial use of platinum and its partial substitution in the automotive industry will make the metal more interesting again in the long term. According to Heraeus, the range is between $850 and $1300 per troy ounce.

The palladium market will settle at a lower level after a historic high price last year. Supply will also recover here after the disruptions. Heraeus expects a minimal supply surplus. Palladium demand in the automotive industry is expected to reach a record 8.5 million ounces this year. The industry is the strongest consumer, accounting for around 90 percent - palladium is used in exhaust catalytic converters for gasoline engines. However, industrial demand (outside the automotive sector) is expected to fall by six percent this year, cushioning the price pressure from high demand from the automotive industry. Heraeus puts the range at $1400 to $2250 per troy ounce.

Rhodium, which is also very dependent on demand from the automotive industry, could be characterized by high price fluctuations. Heraeus assumes a balanced market. Even small shifts in supply or demand can strongly influence the price. Supply risks could arise from insufficient recycling volumes or from strike risks, as the three largest South African PGM mining companies are facing wage negotiations with the mining unions this year. The rhodium price is expected to return to a high range of between $7500 and $22,000 per troy ounce in 2022.

For ruthenium, the return to lower price levels is likely to continue. The metal, which is used primarily in the electronics industry, is expected to show a surplus this year. Supply is expected to increase by about two percent as production problems in Russia and disruptions due to maintenance work in South Africa have been overcome. At the same time, additional stockpiles are being processed in South Africa, which can cover the growth in demand. Heraeus experts see a price range for ruthenium between $250 and $600 per troy ounce.

A larger supply should calm the iridium market. Last year, the price had reached an extraordinary record high as processing problems in South Africa, which provides about 80 percent of the world's iridium supply, limited metal availability. Once these were resolved and market liquidity improved, the price began to fall again. Although a market surplus is expected this year, the iridium price is likely to return to a high level between $2500 and $5000 per troy ounce.

About Heraeus Precious Metals

Heraeus Precious Metals is a leading provider of precious metals services and products. We combine all activities related to our comprehensive expertise in the precious metals loop – from trading to precious metals products to recycling. We are one of the world’s largest refiners of platinum group metals (PGMs) and a leading name in industrial precious metals trading. Our precious metals products are used in a wide variety of industries, including the chemical, pharmaceutical, glass, electronics and automotive industries. We offer top quality solutions and products based on many years of experience and technical expertise. We are a reliable development partner for our customers and find the best solutions for their requirements.

About Heraeus

Heraeus, the technology group headquartered in Hanau, Germany, is a leading international family-owned portfolio company. The company’s roots go back to a family pharmacy started in 1660. Today, the Heraeus group includes businesses in the environmental, electronics, health and industrial applications sectors. Customers benefit from innovative technologies and solutions based on broad materials expertise and technological leadership.

In the 2020 financial year, Heraeus generated revenues of €31.5 billion with approximately 14,800 employees in 40 countries. Heraeus is now one of the top 10 family-owned companies in Germany and holds a leading position in its global markets.