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LAWRIE WILLIAMS: Gold, silver, platinum up a little in early post-Xmas trade

Precious metals were mostly trading a little higher in Asia and Europe in immediate post-Christmas spot trade which may give direction to U.S. pricing when North American markets re-open fully.  However the amounts of the increases are not significant so far and given the North American markets have tended to follow their own unique course in recent weeks, and not necessarily follow others around the globe, nothing should be taken for granted.

Gold was, at the time of writing, trading at around $1,818, silver had regained the $23 level, while platinum was up around $6 and palladium $18, after starting the day in negative territory despite some strong gains in the runup to the holiday season.  The oil price was also trending higher,  All the price increases could well be due, though,  to a small fall in the dollar index whichn was threatening to fall back below 96.

Research from specialist precious metals consultancy, Metals Focus. shows that gold and silver demand in particular, in the world’s second largest precious metals consuming nation, India, was comparatively strong at the tail end of 2021through the Diwali Festival in November and the parallel wedding season.  However comparisons with 2020 may be less relevant as the previous year, and early 2021 were particularly affected by Covid-related restrictions.

In India there has always been a predilection towards gold and silver as jewellery and an investment.  Indeed the Metals Focus researchers noted that the Covid pandemic has reinforced the Indian public’s faith in gold as the earlier price rally helped many to get through the crisis and that gold offered a degree of safety, given it could easily be used as collateral to secure loans. 

Looking ahead they feel that Indian demand for gold, silver and platinum to continue improving, primarily driven by strong economic growth, relatively stable precious metals prices and pent-up demand.  Also weak demand due to virus-related restrictions this year during the Akshaya Tritya Festival, traditionally considered a particularly auspicious time to buy gold, should see a good pick up in 2022 when the Festival falls in early May.

Our own research and analysis had already noted a substantial improvement in Chinese demand this year, which we assessed as being up by over 50% over Covid-affected 2020 by November, and rising as the year of the Tiger approaches.  The Chinese New Year holiday commences on February 1st- traditionally a strong period for gold demand.  Once again, as in India, we would anticipate gold and silver demand to continue rising in 2022.  With both China and India, by far the world’s two biggest precious metals consumers, likely to see positive growth in consumption next year, the effects on metal demand fundamentals are definitely looking positive. 

As we would also anticipate a generally steadier precious metals performance in the year ahead, there is a strong likelihood that any tendency for precious metals ETF outflows may diminish or end, further improving their prospects during the year.  We thus anticipate demand growth of 10% plus for gold, silver and platinum during the year, which may provide some consolation for their disappointing performance in the current year to date, even though 2021’s average gold price was actually a new record over the year as a whole.

28 Dec 2021 | Categories: Gold, Silver, China, Dollar, US, Palladium, Platinum, India

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