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Outlook for Gold, Silver, Platinum and Palladium in 2021

Metals Focus, the global precious metals consultancy, has published the Precious Metals Investment Focus 2020/2021, its flagship annual report on investment in gold, silver, platinum and palladium. The report features comprehensive historical statistics and a forecast for 2020/2021.

Key takeaways from the report:

Despite positive vaccine news, macroeconomic conditions will continue to favour precious metals investment in 2021. Precious metals have enjoyed dramatic gains this year as the COVID-19 pandemic has boosted investor appetite for safe haven assets and led to an unprecedented wave of fiscal policy accommodation in major economies. Gold rallied to a new all-time high in August, driving silver and platinum prices higher. Although palladium was less affected by this move, its favourable fundamentals have continued to lend support.

“Precious metals have come under significant pressure recently as investors revisit cyclical stocks after news of the vaccine started to come through,” said Neil Meader, Director of Gold and Silver at Metals Focus, “but we doubt whether this will be sustained. It will take time for the vaccine to be widely deployed. We also don’t expect there to be a return to normality until at least mid-2021.”

As such, those factors that underpinned inflows into safe haven assets since the pandemic unfolded are expected to persist.


We expect the macroeconomic background will remain supportive for gold investment during 2021. This includes further substantial rounds of fiscal stimulus and liquidity injections, record low policy rates and the proliferation of negative-yielding debt. Low yields benefit gold from the minimal opportunity cost of holding the metal. This also limits the bond market’s ability to act as a hedge against equity price corrections.

Meanwhile, ballooning sovereign debt levels and already high systemic risks are likely to remain in place. “Under the Biden Administration, the US/China relationship is likely to remain challenging, while geopolitical risks still exist elsewhere.

All these factors, coupled with rising inflation expectations (even if only modestly), should continue to underpin gold investment, driving prices up by 14% to an average of $2,030 in 2021” added Neil.

Physical gold markets are starting to recover, but earlier weakness will result in a 120% increase in the physical surplus this year to 59.4Moz (1,847t). Looking ahead, although we expect gold jewellery demand to enjoy a strong recovery it will still remain well below 2019’s pre-COVID levels. In terms of other key market segments, net official sector purchases are projected to ease as some high-profile buyers have scaled back their buying. On the supply side, as COVID disruptions ease mine output will achieve a new all-time high in 2021. Scrap supply will also rebound as the economic downturn, coupled with record gold prices, encourages consumers to liquidate their holdings. As a result, the gold market will record a further, massive surplus in 2021.


Metals Focus expects to see further investment inflows into silver in 2021, driven by positive spillovers from gold and the white metal’s high beta. “Once the gold rally resumes, tactical buying will help fuel further price gains for silver. ” Neil added, “this should help silver outperform gold, which we believe will see the gold:silver ratio continue to fall during 2021.”

Looking at silver’s key fundamentals, a recovery in mine production and scrap will see global supply reach a seven-year high. In terms of demand, high and volatile silver prices will limit the growth in jewellery and silverware, especially in India, the world’s largest fabricator in these two segments. The recovery in silver industrial application is expected to outpace global GDP growth, with offtake in 2021 almost matching the 2019 total. Support will emerge from a range of end-uses, including photovoltaics and automotive demand.

Overall, the silver market is expected to achieve its sixth uninterrupted surplus next year, which we expect will once again be absorbed by the investor community.


Despite a sharp gold price correction, the platinum price has been holding up relatively well during the recent sell-off.

“The price resilience largely reflects supply concerns following the shutdown of Anglo’s ACP converter plant” commented Adam Webb, Director of Mine Supply at Metals Focus. “Even so, we would caution that the impact of this latest closure will be limited as output recovers next year.”

Mine production is expected to recover strongly next year, but still remain below 6Moz (a total it exceeded during 2015-19). This, coupled with a partial recovery in recycling, will see global supply remain some 5% below 2019’s total. By contrast, demand will rebound to pre-COVID levels, supported by healthy gains in autocatalyst offtake. The major drivers are tightening emission standards and our projection of a marginal shift from palladium to platinum in after-treatment systems next year. Jewellery demand will remain healthy due to platinum’s hefty discount to gold. Overall, the market is expected to become broadly balanced in 2021, keeping above-ground stocks near record levels.


The palladium price has enjoyed strong gains this year. This outcome reflects favourable fundamentals, with the metal on track to record another deficit, albeit smaller than in 2019. “Underlying supply-demand dynamics for palladium have improved as we’ve moved through 2020,” Neil commented, “This helps explain the price strength, bearing in mind that investor demand, especially in recent months, has been quite modest.” Net longs on Nymex have fallen by almost 70% this year, while ETPs have dropped by 15% from an already low base.

Metals Focus believes the palladium rally will regain momentum in 2021 due to the widening physical deficit, itself almost exclusively driven by solid gains in the automotive sector. Even though global light-duty vehicle production will only return to its 2019 level by 2022, palladium autocatalyst offtake could touch a new all-time high in 2021. This reflects the metal’s dominance in the gasoline segment and the trend towards higher metal loadings in response to tightening emission standards. Palladium supply is also expected to ramp-up in 2021, though the gains will not match the upside achieved by global demand. As a result, palladium will achieve its tenth successive deficit and lead to a further fall in above-ground stocks. This in turn will help underpin the expected price upside we are calling for in 2021.

Editor’s Note: The Precious Metals Investment Focus 2020/2021 annual report analyses the wide range of options available to investors who are interested in gaining exposure to gold, silver, platinum and palladium. The Report includes the latest supply/demand and price estimates for the current year and forecasts for the next 12 months. Precious Metals Investment Focus is available from Metals Focus.

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