Uncertain times ahead
Near-term sentiment has shifted to the euro, amid market expectations that the Federal Reserve will stop raising rates. However, US job numbers are still good, so one more rate rise is possible which would benefit the dollar. Additionally, economic growth seems to be slowing more in Europe than in the US, which also favours dollar strength this year, since the ECB will most likely delay making its first rate rise.
Despite the potential for dollar strength this year, the precious metals should see some price upside from safe-haven demand. Both political and economic uncertainty are rising and stock market volatility has returned which should drive safe-haven demand for gold and silver. Silver could outperform gold as the gold:silver ratio is very high and does not tend to stay at such elevated levels for long.
PGM prices are mostly expected to trade higher this year, although the platinum price is likely to remain relatively weak. However, there is the potential for strikes in South Africa which could impact PGM production and prices later in the year. Platinum, which has a significant surplus market this year, may see only modest price upside. Palladium has a more diversified supply base than the small PGMs, but the market is tight, leaving it vulnerable to a supply squeeze. The small PGMs rely on South Africa for over 70% of global mine production, so price volatility could also be a feature for them this year.