Gold and silver investment demand is expected to be virtually flat in 2018, as geopolitical and economic concerns continue to draw buying interest, New York-based CPM Group said on Monday. Gold investment demand will increase slightly, to 27.5 million ounces in 2018 from 27 million ounces this year, Jeffrey Christian, managing partner at CPM Group, said.
Silver investment demand will rise to 128 million next year from 108 million ounces in 2017, Christian said. Fabrication demand for silver, largely led by an uptick in solar panels, will drop because there is likely inventory sitting from purchases over the last few years.
"As a result, you'll see less silver being sold in 2018 than in 2017, but it's still an uptrend long-term because solar panels are still gaining in popularity," Christian said. Platinum fabrication demand is expected to drop from 7.06 million to 6.94 million on lower demand from the automotive and jewellery sectors. Total supply for platinum is expected to rise to about 7.4 million ounces from 7.2 million ounces, Christian said.
The shift from diesel-fueled vehicles, which tend to use platinum in engines, to gasoline-powered vehicles, which use palladium, will continue to help palladium demand. Palladium fabrication demand is expected to drop to 9.3 million from 9.4 million as auto sector demand from China and the United States slows. "There are enormous amounts of refined palladium inventories around the world," Christian said. ABN Amro expects lower overall demand in palladium in 2018.
Gold and silver prices will be flat in 2018, according to CPM Group's outlook. The World Bank said in October that it expects overall precious metals prices to fall 1 percent in 2018, but with some divergence. "Upside risks to the forecast include widening geopolitical tension, delays in central bank rate increases, a weaker-than-expected dollar and a mine supply shortfall," the World Bank wrote in its 2018 commodities outlook.