In recent months, gold has shined brightly in the commodities market, with prices rising about 33% this year, nearing the impressive mark of $2,800 per ounce. However, a recent World Bank report suggests that 2025 and 2026 could mark a shift, with silver poised to take the spotlight.
Gold Rally May Be Slowing Down
According to the World Bank’s forecasts, while gold prices are expected to rise by 21% year-on-year in 2024, demand may begin to weaken in the following years. The report highlights that central bank purchases and jewelry production, which together account for about two-thirds of global gold demand, could decrease due to record-high prices. Analysts predict that gold prices may dip by a modest 1% in 2025 and another 3% in 2026, suggesting that the current rally may lose momentum over time.
Silver’s Potential for Growth
Unlike the expected slowdown in gold demand, silver demand is projected to rise steadily over the next few years. The World Bank sees silver as a versatile asset with both financial and industrial applications, driving its demand. The metal is especially valued in high-tech and green energy sectors, where its industrial use is expanding rapidly. World Bank analysts forecast a 20% increase in silver prices in 2024, followed by gains of 7% in 2025 and 3% in 2026. Currently, silver prices have already climbed above $32 per ounce, marking a year-to-date gain of more than 35%.
Despite silver’s recent strong performance, the gold-to-silver price ratio remains high, around 84. Analysts see silver as undervalued compared to gold, and many expect it to continue outperforming gold through 2025, as its demand dynamics suggest room for further growth.
Platinum and Energy Market Outlook
Beyond gold and silver, the World Bank remains cautiously optimistic about platinum. Although platinum prices are expected to see only a 4% increase in 2024, the forecast calls for gains of 5% in both 2025 and 2026. This outlook is mainly due to tightening supply as major producers, particularly South Africa, face declining output. While automotive demand for platinum may face challenges, the overall supply constraints are expected to provide price support.
On the energy side, the World Bank predicts a potential decline in oil prices in the coming years. Oil prices are forecasted to drop by 6% in 2025 and an additional 2% in 2026. Although geopolitical tensions could add volatility, analysts note that factors such as OPEC+ policy adjustments and a global economic slowdown could weigh on oil prices. Additionally, factors like lower-than-expected North American oil output and increased demand for liquefied natural gas (LNG) in Asia could add complexity to the energy market’s outlook.
Summary and Outlook
In summary, the World Bank’s forecasts for the precious metals market reflect a cautiously optimistic view. Gold may experience a slowdown in demand, while silver’s diverse industrial and financial applications position it well for future growth. Although platinum’s growth may be modest, it too could benefit from tightening supply constraints. In contrast, the energy market may face downward pressure as supply growth and demand factors continue to shift.
For investors in precious metals, this outlook suggests that focusing on silver and platinum may offer better returns in the coming years. Additionally, the energy sector’s uncertainties serve as a reminder for cautious investment, as oil prices face both upward and downward risks amid shifting geopolitical and economic factors.
