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2023 LBMA Precious Metals Forecast Survey

The LBMA Annual Precious Metals Forecast Survey is the most prestigious survey in the precious metals calendar. 30 analysts’ from across the globe, give their individual forecasts and commentaries for precious metals prices in 2023.

This year’s LBMA Forecast Survey has revealed that analysts are cautiously optimistic about gold and silver prices in 2023, forecasting them on average to be 3.3% and 8.8% higher respectively by the end of this calendar year compared to average prices in 2022. Palladium sees the most negative sentiment for price, with analysts expecting a fall of 14.3% compared to 2022 prices. But analysts have shown a bullish view to the performance of platinum, with an increase of 12.5% forecast against 2022 prices.

Gold Forecast

Gold is forecast to trade within a range of around $755 this year, similar to $780 in 2022. Analysts are not expecting the gold price to move much this year compared to the actual average price in 2022 (+3.3%), as well as in relation to the actual average price in the first half of January 2023 (-1.1%). The most bullish forecaster this year for gold is analyst Peter Fertig, QCR Quantitative Commodity Research, with his average of $2,025, while analyst Marcus Garvey, Macquarie Bank, is most bearish with his forecast of $1,594.

Peter Fertig’s Comments: “Gold proved again that it is not a good hedge against inflation. The reason is simple: as gold bears no interest, US money market rates and bond yields as well as the US dollar are the dominating factors. They had all been headwinds for gold last year. However, in this year, they turn into backwinds for gold prices, which are expected to gain considerably.

The fed has not yet finished its job of hiking interest rates. But the indices of purchasing managers point to a cooling of the US economy. Thus, the FOMC is expected to reach the peak for the Fed Funds target rate rather soon. But in the eurozone, the ECB will probably be disappointed as the PMIs indicate a reduced probability for a recession in this year.

Thus, the ECB most likely will get no support in combating inflation and will have to do its job alone. Therefore, interest rates will move in favour of the euro and weaken the US dollar. This should lead to further gains in gold after the positive start into the year 2023.”

Marcus Garvey’s Comments: “We expect a further 25bps of tightening in 1Q23 and then the Fed to hold rates firm, even as inflation falls with the US economy entering recession. This period of rising real interest rates (with the absence of a Fed “put”) should see gold prices fall alongside risk assets and keep the US dollar relatively firm, even as the dollar index is likely to have made its cycle high in 2022. We expect this period to mark the lows for gold, before it begins to rally sustainably once the market can start to price the next easing cycle.”

Silver Forecast

The trading range for silver is forecast to be around $20.30, which is just 10 cents more than what they had forecast in last year’s survey ($20.20).

The average forecast for this precious metal of $23.65 represents a 3.3% rise on the actual price average in 2022 ($21.73) – but is 0.9% less compared to the actual average price in the first half of January 2023 ($23.88).

Analyst Bruce Ikemizu, Japan Bullion Market Association, is most bullish for silver this year, with his forecast of $27, and analyst Debajit Saha, Metals Research, Refinitiv, is most bearish with his $17.5 average forecast.

Bruce Ikemizu’s Comments: “Silver will be supported by the prospect of supply shortage and renewed interest from investors of the world. As for platinum, the move towards a carbon-free society is helping silver demand for solar panels and other applications such as various parts in electric vehicles.

Debajit Saha’s Comments: “After a 14% year-on-year slump in 2022, we expect the trend to continue, with silver forecast to average $20.75/oz this year, representing a fall of 5% on a year-on-year basis. Rising interest rates in the US will continue to weight on the price. Support is not expected to come from the industrial front either, barring the solar segment, as higher interest rates are set to put a drag on the economic growth. Slowdown in offtake is expected in major physical markets such as India and China. However, we believe the market may remain extremely volatile in the first half of the year, as inflation in the US has remained elevated, while fears of the recession due to rising interest rates may create headwinds, pushing the price to $25.50/oz. In the second half, we expect the economy risks to subside reasonably, which could put sufficient pressure on the price to go below last year’s low.”

Platinum Forecast

Turning to platinum, analysts are predicting the average price to be $1,080.4 – a jump of 12.5% compared to the actual average price in 2022, and 0.6% up compared to the actual average price in the first half of January 2023. Prices are forecast to trade within a range of around $595.

Like last year, analyst James Steel, HSBC Securities, is the most bullish for platinum this year with his forecast of $1,241, and analyst Marcus Garvey, Macquarie Bank, assumes the most bearish position for the second time this forecast with $988.

James Steel’s Comments: “We expect platinum to build a base above $1,000/oz and move higher this year. Auto demand is likely to benefit from increased substitution with more expensive palladium and a continued recovery in production. Auto recycling supply may also rise, but be capped by limited new inventory. Meanwhile, jewellery demand is likely to increase in 2023, but from low levels. The outlook for other sources of industrial demand is generally positive. South African production may be constrained by load shedding, while production growth elsewhere, including Russia, is generally positive, but limited.

Investors may cease liquidating and rebuild ETF holdings. We look for coin and bar demand to remain positive, although it may moderate from 2022 levels. New, mostly scientific and environmental sources of demand, including hydrogen applications, are growing and may increase sharply, but from low levels. We expect the market to swing into deficit in 2023, which should aid prices.”

Marcus Garvey’s Comments: “The pre-investment balance is expected to register a small surplus in 2023, as catch-up refining of work-in-process inventories is offset by improved auto production, demand substitution and higher heavy-duty diesel loadings. The post investment balance could therefore swing into deficit, but our expectation for the Fed to stay the course and bring inflation back to target presents a clear headwind to this. Rather, additional support may come from Chinese apparent demand continuing to run above estimates of real consumption. Hydrogen remains the great hope for demand growth, but continues to impact sentiment more than near-term fundamentals, at this stage.”

Palladium Forecast

Palladium prices are set to drop this year according to the analysts, with an average price forecast of $1,809.8 for 2023 – a not insignificant drop of 14.3% compared to the actual average price in 2022 ($2,112.06). This average forecast represents a 2.3% increase compared to the actual average price in the first half of January 2023 ($1,769.5).

James Steel is once again most bullish analyst with his forecast of $2,180, while analyst Thorsten Polleit, Degussa Goldhandel, is most bearish with his $1,550 forecast.

James Steel’s Comments: “We expect higher palladium prices in 2023. Long-running declines in 2022, on the realisation that Russian material continued to reach consumer markets, may be running its course, as some level of supply risk remains in the market. Ongoing recovery in auto demand will boost consumption, although demand may be limited by loss of market share to alternate vehicles and on substitution with less expensive platinum.

Auto recycling levels may also rise. Other forms of industrial demand are likely to increase and we expect exchange traded funds and coins and bars to make modest contributions to demand. Russian, North American and Zimbabwean production is likely to rise. South African output should increase but may be constrained by power shortages. While palladium’s supply-demand balances may indicate a narrowing deficit from 2022 levels, we believe it is still price supportive. Much may depend on Russian flows and geopolitical risk.”

Thorsten Polleit’s Comments: “In our view, palladium is trading at an inflated price, even after a substantial mark-down since mid-2021. Palladium has benefitted greatly from the shift from diesel to gasoline engines in recent years.

Electric cars that are battery-charged do not currently use platinum or palladium. With demand being overwhelmingly driven by the automotive industry, palladium’s future is rather unclear. In any case, we do not believe palladium should be trading too far above our estimated platinum price.”

Top 3 Drivers for the Gold Price in

The analysts were also asked to identify their top three drivers for the price of Gold in 2023. Some 43% of analysts cited the US dollar and the Fed’s monetary policy as the top driver, incorporating trust in the dollar, the currency’s strength, and the Fed specifically. Second-most important in the list of drivers was regarded to be inflation (14%), while geopolitical factors (11%) took third spot – a factor not deemed significant in last year’s survey.

Editor’s Note: The London Bullion Market Association (LBMA) is the world’s authority for precious metals. The LBMA is a worldwide association of 147 companies across 22 different countries. Members are predominantly banking institutions, traders, refiners, processors, producers and manufacturers LBMA Accredited Refiners process up to 90% of the world’s annual gold production.

Once a year, the LBMA conducts an analysis survey on the prices of traded commodities. This year, 30 analysts’ give their individual forecasts and commentaries, revealing their insights behind their forecasts for high, low, and average prices for Gold, Silver, Platinum and Palladium. To read the full 2023 LBMA Annual Precious Metals Forecast Survey Click Here.

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