Heraeus, a precious metals company, based in Hanau, expects gold to reach a new all-time high in euro terms in the coming months. The forecast for precious metals presented on Tuesday predicted that gold’s price in euros would reach a record high.
Henrik Marx, the head of precious metals trading at Heraeus, explains: “The company anticipates that the price of gold per troy ounce will fluctuate between 1620 and 1920 dollars in the coming year (31.1 grams).” Currently, the price is approximately $1,780. The record of 2075 dollars, set in August 2020, is likely to be slowly surpassed. However, when converted to euros, the price is only approximately 10% below its peak of 1,870 euros per ounce in March 2022, shortly before the outbreak of the Ukraine war.
Gold analysts at Heraeus say that the end of interest rate hikes by the U.S. Federal Reserve (Fed) and the European Central Bank (ECB) should make it more likely that the price of precious metals will go up. Heraeus believes that the main reason for gold’s relatively poor performance as an investment product in the current year is that other interest-bearing financial investments, such as bonds, have become more appealing due to an increase in the so-called opportunity costs associated with holding gold. However, there have been the first inflows into gold exchange-traded funds recently (ETFs).
In addition, central banks have purchased large quantities of gold. This year, they have purchased approximately 700 tons of gold collectively. This purchase is the largest since 1967, and numerous central banks, including Turkey’s, have been purchasing gold. The Fed and the European Central Bank (ECB) were not involved. However, for those banks that did purchase gold, the motivation was likely to lessen their dollar reliance.
In the coming year, Heraeus anticipates the price of silver to fluctuate between 17 and 25 dollars per troy ounce. The price currently stands at $22.50. According to the experts, the range for platinum prices is between 800 and 1150 dollars, and the range for palladium prices is between 1300 and 2250 dollars.
There are intriguing developments on the palladium market’s demand and supply sides. Palladium is utilized by eighty percent of the automotive industry, typically in catalytic converters. However, fewer converters may be required if more people purchase electric vehicles. Platinum also partially replaces palladium in the automotive industry. According to Heraeus, palladium is typically one of the metals with the worst performance.
However, Russia remains a significant supplier, accounting for approximately 40% of global production. Palladium has been exempt from Russian sanctions to this point. Marx, an expert on precious metals, does not think the West will add the metal to the embargo lists. “The damage would be too great,” he said. “Palladium in catalytic converters helps protect the environment and the climate. The turbulence in the palladium market caused by a Russian embargo could make it more difficult to meet transportation’s climate goals.”
Gold has been compared to bitcoin on many occasions. Heraeus believes, however, that the two asset classes are very different. In the past, Bitcoin prices of more than $60,000 were simply a result of the extremely loose monetary policy set by central banks. “We will not see that again in the coming years,” says Marx. “Currently, bitcoin is valued at approximately $17,000.” Marx also noted, among other things, the volatility difference between gold and bitcoin: “The movement of the gold price in a month occurs in a day for crypto.”
