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LAWRIE WILLIAMS: LBMA experts forecast gold, silver and pgm prices for 2022.

Each year the London Bullion Market Association (LBMA) invites a selection of top experts from around the world to give their analyses of how precious metals are likely to perform in the year ahead.  This year the panel of experts numbered 34 – from 18 different cities representing all corners of the globe – offering their expert insight into the direction of precious metals prices in 2022.  Some predicted price patterns for all four principal precious metals, while others only submitted forecasts for those for which they felt they had particular expertise.

As usual, the LBMA invited these experts to forecast the average price of each of the four main precious metals for the year ahead and to back their forecasts up with their supposedly insightful analyses and commentary for each.  The experts selected include Ross Norman, former CEO of Sharps Pixley who has one of the stronger track records in these annual predictions and we have already published his thoughts in these pages – See here for Ross’s predictions.

According to the LBMA’s summary of the exercise, analysts in this year’s survey are mostly neutral about the gold price in 2022 forecasting that prices are likely to be broadly flat when compared against 2021 averages. Palladium is unloved this year, with analysts forecasting prices against 2021 average prices to fall  by 18%, with more modest falls expected for silver (6.4%) and platinum (2.5%).  Altogether a rather more downbeat analysis of precious metals prospects than tends to have been the consensus in the past.

Table 1: Average price forecast 2021 and 2022 and Percent change

Precious Metal

2021 Average Price Achieved*

2022 Average Price Forecast

Percentage Change

Gold

$1,798.6

$1,801.9

+0.2%

Silver

$25.14

$23.54

-6.4%

Platinum

$1,090.2

$1,063.4

-2.5%

Palladium

$2,398.3

$1,967.6

-18.0%

*Calculated on LBMA closing pm prices.

For the record the writer’s own price forecasts for 2022 tend to be a little higher for gold, silver and platinum with predicted year-end prices of $2,000 for gold, silver at $25.50, platinum at $1,100 while that for palladium was a distinctly bearish $1,350.  Current prices as we write are Gold $1,804.8, Silver $22.66, Platinum $1,039 and Palladium $2,342.  On this basis gold is probably more or less on track with our prediction. Silver lagging behind, platinum about right and palladium very definitely trending higher. But with nearly 11 months to go before the year end almost any of the forecasts could end up being met.

On the LBMA experts’ forecasts, gold is seen as trading in a range of around $780 this year, compared to $1,192 in 2021. Analysts are thus forecasting the gold price to be broadly flat in relation to the actual average price in the first half of the past month.

For the second year running, Thorsten Polleit of Germany’s Degussa, which owns Sharps Pixley, is the most bullish analyst with his average of $1,965. Bernard Dahdah of the French-owned Natixis investment bank is the most bearish with a forecast of only $1,630, which is perhaps more in line with that of a couple of U.S. banks which have predicted that the gold price will suffer badly as the Federal Reserve raises U.S. interest rates.

The experts tend to be overall bearish on silver, totally ignoring some internet reports of a metal shortage and consequent squeeze, which we have also discounted.  Silver’s trading range is put at around $20.20, approximately half what the analysts had forecast would be the case a year ago.

Overall, they are forecasting the silver price to average $23.54 in 2022, representing a 6.4% fall compared to the actual average price in 2021 but 3.6% higher than the actual average price in the first half of January this year.

Andy Habluetzel of Sharps Pixley is the most bullish for silver in this year’s survey with his average forecast of $27 and Yufei Liu of Bank of China is the most bearish with her forecast of $20.11.

The group of analysts are predicting the overall average in the platinum price this year to be $1,063.4, 2.5% lower than its average 2021 price, but up 10% compared to its actual average price in the first half of January 2022. Prices are forecast to trade in a range of around $619 compared to $1,053 in last year’s survey.

James Steel of HSBC is the most bullish analyst on platinum  with his average forecast of $1,210 and Frank Schallenberger of Baden-Wurttemburg’s Landesbank from Germany the most bearish with a forecast of $886. 

We have tended to err on the positive side for this pgm given its broader range of applications, some of which are in the ‘greener’ sector which may well be coming into its own as time progresses.

Palladium is definitely out of favour in analysts’ expectations this year with a feeling that it may have risen too far too fast over the past couple of years. They see average prices around 18% lower compared to the metal’s actual average price in 2021, but 3.8% higher against its average price in the first half of January 2022, although well below its current price as we write.  Palladium is definitely the most volatile among the major precious metals. It is thus forecast to trade in a range of around $1,487, which is broadly in line with last year’s range ($1,500).

Philip Klapwijk, an independent Hong Kong-based analyst, formerly with GFMS, is the most bullish about palladium, with his average forecast of $2,320 and Frank Schallenberger who seems to be very much a pgm bear, is the most downbeat with his forecast of $1,571.

We have tended to be even more bearish in our palladium outlook, given that the huge supply deficit, which had been buoying up prices, has largely fallen away and that its principal market in petrol (gasoline)-fuelled light vehicles is beginning to be phased out in favour of non-polluting drive systems.

02 Feb 2022 | Categories: Gold, Silver, Palladium, Platinum

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