Gold Shines Amid Uncertainty

SadaNews Economy - Precious metal prices soared to unprecedented levels in the first half of 2025, following a 20% increase in 2024. Gold led this rise, approaching its all-time highs in mid-June amidst escalating geopolitical tensions and increasing economic uncertainty. Silver and platinum also saw strong gains. Prices are expected to remain high throughout 2025 and 2026. Gold is on track to record its highest annual average ever, supported by strong demand as per a report published by the World Bank.

Silver prices are expected to continue their rise, bolstered by resilient demand, while a shortage of platinum supply will support its prices. However, further escalation of global tensions could drive gold prices above current expectations, whereas weaker industrial activity than anticipated might weaken demand and impact silver and platinum prices, pushing them down to lower levels than current forecasts.

Gold, Silver, and Platinum Prices

Gold prices rose by nearly 25% during the first half of 2025, after reaching record highs in 2024. The recent price increases were driven by strong demand amidst growing uncertainty concerning policies and escalating geopolitical tensions. A sharp rebound in flows of exchange-traded gold funds in the first quarter of 2025 pushed investment demand to its highest level since 2022. Central bank purchases of gold continued to contribute to rising demand, reflecting their strategies for managing reserves. Strong demand is expected to continue in the near term, supported by global uncertainty and geopolitical risks. Gold prices are expected to rise by about 35% in 2025 (year on year), before slightly declining in 2026 as some prevailing uncertainties begin to ease. However, prices are expected to remain significantly higher during the 2025-2026 period compared to historical averages - about 150% above its average from 2015-2019. The risks surrounding the outlook are likely to tilt towards the upside, as geopolitical developments are anticipated to remain a major source of uncertainty.

Global Demand for Gold

Silver continued its strong momentum in 2024, increasing by nearly 20% in the first half of 2025 to reach record levels. Even with the strong rise in silver prices, the gold-to-silver ratio rose above its ten-year average in early 2025, continuing its upward trend. This partially reflects an increased relative demand for gold as a safe haven amidst rising uncertainty and geopolitical tensions. Demand for silver is expected to remain strong, supported by its dual role as an important industrial input - used in sectors such as renewable energy and semiconductors - and as a safe haven. Increased economic and geopolitical uncertainty may enhance silver's appeal among investors. On the supply side, global production is expected to steadily increase in 2025, due to expansion in mining output. Silver recycling, which accounts for about 20% of global supplies, is expected to remain steady after recording a 6% increase in 2024. Overall, strong demand is expected to push silver prices up by 17% in 2025 (year on year), with an additional 3% increase anticipated in 2026.

Gold to Silver Price Ratio

Platinum prices increased by about 30% during the first half of 2025, reaching their highest levels in over a decade. This increase is largely attributed to a severe supply shortage, with mining production expected to fall to its lowest level in five years this year. Modest gains in recycling are expected to partially offset this shortage, while surface stocks are anticipated to decline sharply. Meanwhile, demand for platinum in the automotive and industrial sectors - particularly chemicals and fiberglass - which together account for about two-thirds of platinum usage globally, is expected to decrease. Despite weak overall demand, supply constraints are expected to support prices, which are anticipated to rise by 10% in 2025 (year on year) and an additional 2% in 2026.

Source: World Bank; World Platinum Investment Council