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(Kitco News) – The bleak start of the gold market by 2021 may only be the beginning of a long-term downtrend as the World Bank predicts lower prices for 2021 and 2022.
In its April commodities report, the international financial institution said it expects the average gold price to be around $ 1,700 an ounce this year. Analysts expect the average gold price to drop to $ 1,600 in 2022.
The World Bank’s outlook for gold is driven by prices struggling to find enough bullish momentum to break through $ 1,800 an ounce. June gold futures last traded at $ 1,787.50 an ounce, up 1% on the day.
Gold’s poor performance this year is even more striking compared to the broader commodity market.
“Currently, almost all commodity prices are above pre-pandemic levels, and prices for some commodities, especially metals, are well above their previous levels – copper prices were almost 50 percent higher in March 2021 compared to the end of 2019. … thanks to an improved global economic outlook, fueled by significant monetary and fiscal stimulus in advanced economies and stable, albeit uneven, vaccination rates, ”analysts said in a recent commodity report.
For the entire iron and steel complex, the World Bank said it expects prices to rise by 30% this year, with a correction in 2022 as the global economy begins to normalize. By comparison, analysts expect gold prices to fall 4% this year as investment demand weakened by an improving economy and rising bond yields.
“Higher real returns make gold less attractive to investors. Investments in gold-backed exchange-traded funds have also dropped sharply in recent months, and central banks have cut their purchases of gold. Physical demand is recovering from a significant decline in 2020, but remains well below the previous year. – pandemic levels, ”analysts said.
However, the World Bank has noted two silver lining in the precious metals market.
Analysts said they expect silver prices to rise by 22% this year. Boosting industrial demand for silver should help average prices this year to be around $ 25 an ounce. The bank expects prices to fall in 2022, averaging around $ 22 per ounce per year.
“Prices were boosted by a rebound in industrial demand (electronics, cars and solar), which accounts for more than half of silver consumption (compared to less than 10 percent for gold). Investment demand has also been robust as investors have been net long since mid-2019, ”analysts said.
Silver continues to outperform gold prices. Silver futures for July last traded at $ 26,495 an ounce, up 2.40% on the day.
The World Bank also sees potential for the price of platinum to rise. They noted that prices rose 24% in the first quarter. They added that they expect prices to rise by 25% this year.
“Jewelry demand rebounded, while demand in the automotive sector was supported by a strong recovery in automotive production. The introduction of stricter emission standards in China and Europe has led to an increase in the use of platinum in autocatalytic converters, ”analysts say.
Platinum prices are expected to average around $ 1,100 an ounce by 2021. The average price is expected to be around $ 1,110 an ounce next year.
July platinum futures last traded at $ 1,222 an ounce, up more than 1% on the day.
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