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Record prices and surging demand set to continue for gold and silver

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By Colin Hay - 
Gold silver continued price strength

Despite the gold price continuing to hit record levels, forecasters remain confident that demand for the precious metal will continue to rise well into the future.

Gold is currently sitting at US$2,288 per troy ounce, jumping again overnight after US Federal Reserve chair Jerome Powell suggested that rate cuts are more than likely this year.

Although Mr Powell remains circumspect on when any rate changes may be made, many analysts are suggesting the first may come as early as June.

While US monetary policy is currently having a significant impact on gold pricing, longer-term matters are also playing a role in keeping gold – and silver – shining.

Prices to remain elevated

The Office of Australia’s chief economist is forecasting gold prices to remain elevated in 2024.

The latest Energy Quarterly report from the Australian Department of Industry, Science and Resources (DISR) expects gold to average about US$2,020/oz in 2024 – a 6% upward revision to its previous estimate.

DISR expects that, once monetary easing commences, gold prices are expected to receive a further boost leading into 2025 as the US dollar eases and investors gain greater clarity on the pace and scale of further rate cuts.

Gold prices are forecast to average US$2,030/oz in 2025, supported by monetary easing and continued strength in demand.

Long-term demand helping

World gold consumption is forecast to grow by 2.7% a year from 2026 to reach 4,700 tonnes in 2029.

The DISR believes demand growth will be largely driven by rising jewellery consumption, with gradual increases also expected in investment demand and high-tech manufacturing.

Jewellery consumption is forecast to grow by 4.4% a year on average from 2026 to reach 2,550t by 2029.

Investment demand is forecast to grow 3.4% a year on average from 2026 to reach 1,200t in 2029.

Meanwhile, global gold supply is forecast to grow to a peak of 5,050t by 2025, with increasing world gold mine production supported by further strength in recycling activity.

Gold recycling activity is forecast to rise to 1,275t in 2025, in line with a forecast peak in gold prices.

World gold mine production is forecast to rise by 1.9% a year on average by 2025 to 3,780t, led by gains in Canada, the US, Chile and Brazil.

Silver remains popular

The Silver Institute’s latest market report has estimated that global silver demand will hit 1.2 billion ounces in 2024, the second-highest level ever recorded, owing to a projected record high in industrial demand and a turnaround in jewellery and silverware offtake.

It would also be a new annual high for industrial sector demand.

Industrial demand alone is expected to rise 4% to a record 690Moz on the back of last year’s all-time high.

As in recent years, the photovoltaics and automotive industries will be key drivers.

Specifically, new higher-efficiency N-type solar cells, which require more silver than older-style cells, are moving into mass production.

The report suggests Indian silver jewellery fabrication will rise by 9%, which will help worldwide consumption rise to a record 6%.

On the supply side, total global silver supply is forecast to grow by 3% to 843Moz in 2024 to an eight-year high of 1.02Boz, entirely led by a recovery in mine output.