Since February, the price of platinum has dropped dramatically. Rhodium demand will most certainly fall as a result of the chip shortage. Unlike platinum and silver, Rhodium prices are subject to chip scarcity. So, what can we expect in the future? Here are a few forecasts:
Platinum prices have fallen precipitously since February, and many investors are perplexed why. This is due to its application in the auto catalyst market, which has witnessed a slowdown in recent years, particularly following the Volkswagen diesel emissions scandal. Diesel automobiles have long been popular in Europe, but their popularity is expected to wane as the trend toward electric vehicles grows. Aside from decreasing demand, the metal suffers from a serious supply constraint. A metal deficit would result in a metal oversupply in the market, lowering prices.
The worldwide automotive sector consumes a lot of rhodium and palladium. These metals are used in catalytic converters in the industry. A chip shortage is projected to impact chip production by the third quarter of 2021, and it is expected to last through 2022 and potentially into 2023.The rhodium and palladium shortages are expected to last until at least the second half of 2021. However, the recent decline in auto sales has alleviated supply concerns. Because the chip scarcity is likely to last well into Q4 2021, these metals are less vulnerable to price drops than they would have been if they were still in strong demand.
The chip scarcity has had an impact on automotive production and commodity prices. As thieves target them, the precious metals used in catalytic converters become more valuable. In a recycling center, a single ill-gotten catalytic converter can earn $50 to $250. According to AlixPartners, the global automobile industry will suffer a $210 billion loss as a result of chip scarcity in 2021. However, this sum is lower than AlixPartners' initial prediction of $60.6 billion in late January.
Precious metals demand has slowed in the recent year. This is due in part to rising interest rates. Furthermore, the higher US dollar has weakened the value of other currencies. Prices are also influenced by geopolitical factors such as Russia's invasion of Ukraine and rising inflation.
Nonetheless, some economists anticipate that precious metals demand will continue to rise. The transition to green and sustainable technologies will create substantial sales and finance opportunities, particularly in Asia, North America, and Europe. The automobile sector currently consumes a small number of precious metals, but this influence is likely to expand in the coming years as vehicle manufacturing increases. The passenger car category is expected to have the highest demand for precious metals between 2022 and 2031. Because of their excellent endurance, platinum and palladium are projected to lead the market.
Furthermore, the relaxation of COVID-19 limits will help silver demand. Furthermore, the demand for jewelry will continue to rise. The Omicron wave, however, will reduce this expansion in early 2022. Furthermore, silverware production is predicted to rise by 21% this year. India will be the primary driver of this increase.
Silver prices would most certainly climb due to a precious metal shortage in 2021. In general, the price of silver will rise by about 5% to 10%. In 2021, the deficit was predicted to be minor in comparison to the total supply. Investor confidence will be influenced by the prospect of a tightening cycle, while uncertainty over the post-pandemic global economic recovery will dampen industrial demand. A strong recovery in metal supply, on the other hand, is predicted to reduce the underlying imbalance, resulting in a more balanced market in 2022.
Several variables will influence silver supply and demand, including strong industrial manufacturing and expanding car electrification. Furthermore, the president of the European Commission has declared a mandate to raise the number of rooftop solar panels over the next five years. This will raise demand for silver, which is mostly utilized in the production of photovoltaic panels.
The price of gold is projected to fall in the coming months as investors transfer to US Treasuries with yields of less than 2%. While this is a negative indicator for the metal, it will almost certainly serve as the impetus for a short-term price drop. Furthermore, keep in mind that the price of gold has already increased by more than 40% since the beginning of 2018. Gold is predicted to reach $1,800 per ounce in the first quarter of 2021 before falling to $1,750 per ounce in 2022.
According to the World Gold Council, worldwide gold supply is approximately 80% less than global demand. Global demand for gold, on the other hand, is expected to rise by 10% in 2021. This is due to rising global demand from central banks. In 2021, central banks purchased almost 430 tons of gold, bringing global gold stockpiles to an unprecedented level. Furthermore, retail consumption is expected to climb by about 10% in 2021, as will gold usage in jewelry production and ICT items.