Precious metals consultancy Metals Focus expects spot gold prices to reach new all-time highs of about $3 000/oz in 2025 on the back of further interest rate cuts, geopolitical concerns and portfolio diversification.

After peaking at $2 686/oz in September this year, Metals Focus says in its 2024/25 yearly report that the gold price may average $2 800/oz by the first quarter of next year. The gold price is, however, expected to ease to about $2 400/oz by the end of 2025.

The easing of the gold price would be owing to high US equity market valuations and thereby the potential for a correction in equities. Central bank purchases of gold will, however, continue to offer support but fundamentals in a high-price environment may remain limited, the consultancy says.

As US stock markets have continued to rally, this has encouraged some investors to buy gold as a portfolio diversifier, which in turn has boosted the price of the metal.

“After all, price-to-earnings ratios are exceptionally high, so owning defensive assets such as gold makes sense.

“Longer-term strategic investors have also expressed concerns about the direction of US government debt given scant sign of fiscal prudence in Washington,” Metals Focus states, adding that many of these factors have also benefited silver.

SILVER

Metals Focus forecasts in its yearly report that silver prices will reach $35/oz by the second quarter of 2025, benefitting from gold’s positive spillover effects and a persistent deficit.

However, there are concerns about the Chinese economy limiting gains for silver.

The consultancy expects the gold:silver ratio to stay in the low-to-mid 80s, and as gold eventually loses some momentum, this will see silver prices falling below $30/oz by the last quarter of next year.

Despite this, the yearly average price is projected to rise by 9% to $30.80/oz, which would be a 13-year high.

From their respective troughs in October last year, through to their recent peaks, silver has outperformed gold somewhat. However, this outperformance (58% gain against 48% for gold) has been limited, considering silver’s traditional high-beta relationship with gold and its robust supply-demand fundamentals, the consultancy notes.

The gold:silver ratio has continued to disappoint silver bulls. It ventured down to the low-70s, around the time of a shortlived rally in base metals, but soon returned back above the 80 mark, against a long-term average below 70.

“In our view, this reflects the still healthy levels of above-ground bullion stocks and the fact that many of the generalist investors, that have moved into gold, are reluctant to invest in silver, which is ultimately more of an industrial commodity and does not enjoy the same quasi-monetary attributes that gold has,” Metals Focus explains.

PLATINUM GROUP METALS

Metals Focus says platinum has been rangebound at between $850/oz and $1 100/oz in the year to date, supported by a sizeable physical deficit, despite high above-ground stocks.

In 2025, a smaller deficit, underpinned by increased autocatalyst scrap, is expected to push prices towards the upper range, with Metals Focus expecting the yearly average price to rise by 13% to $1 070/oz.

Despite significant supply deficits, palladium remains under pressure from a bearish view of long-term fundamentals and ample above-ground inventories.

A reduction in the physical deficit is expected in 2025, with the potential for a return to surplus in the longer term. Price volatility remains likely, but the yearly average price is projected to rise modestly by 3% to $1 010/oz.

Metals Focus also expects a narrowing deficit for rhodium in 2025 as softer demand from the glass and chemical sectors combines with increased recycled supply. This will likely push the yearly average price down by 16% to $4 000/oz, driven by a bearish long-term outlook and reduced investor interest.

Platinum group metals (PGM) have overall not benefited much from the macroeconomic backdrop globally, and gold’s rally, with investors being generally focused on PGM fundamentals and their outlook.

As a result, prices over the past 12 months have either been rangebound or under pressure.

The biggest headwind for PGMs remains the outlook for battery electric vehicles’ penetration of global car production and sales.

This, coupled with sizeable above-ground inventories of PGM bullion, has been keeping prices under pressure, despite platinum, palladium and rhodium estimated to be in deficit this year.