Silver and Platinum will Overtake Gold as the Economy Recovers
Strategists at UBS Global Wealth Management have pointed out that silver and platinum will overtake gold in 2021 as the economy and industrial demand recovers. A greater focus of policymakers on renewables and decarbonization in 2021 may also help silver. According to UBS, more than 50% of the silver used in industrial applications is linked to solar panels and electronics. Meanwhile, gold will struggle to attract enough traded fund inflows to keep prices above $1,900.
2020 was one of the best years on record for the yellow metal. Investors sheltered themselves into the safe-haven asset amid geopolitical and economic uncertainty. The precious metal even hit a record $2,075 on August 7, 2020.
But UBS Global Wealth Management strategists do not see gold repeating its stellar performance in 2021. Instead, the Swiss firm appreciates that other metals, including silver and platinum, will outperform gold over the next year.
As the economy recovers in 2021, industrial demand will support silver and platinum group metal prices, UBS said. Strategists believe silver prices will reach $30 per ounce by the end of the first quarter and eventually stabilize at $27 per ounce by the end of the year. Silver is currently trading about $25 per ounce.
Gold prices are forecast to decrease in the Q2 of the year
The platinum will increase to $1,250 an ounce by the end of 2021. It’s an increase of 16% over the price on Tuesday, UBS predicted. The firm also said that palladium could hit $2,900 per ounce again in 2021. It is about 21% higher than current levels.
A greater focus from policymakers on renewables and decarbonization in 2021 may also help silver. According to UBS, more than 50% of the silver used in industrial applications is linked to solar panels and electronics.
Meanwhile, gold will struggle to attract enough ETF inflows to keep prices above $1,900, said UBS. The firm forecasts the asset to end the year 2.5% below current levels at $1,800 the ounce.
UBS added that the dollar’s current weakness and low real interest rates would keep the prices of all precious metals high in the first quarter of 2021. However, gold will weaken in the second quarter as the macroeconomic environment improves, and the Federal Reserve indicates that it will gradually reduce its price.
UBS analysts advise investors with a high appetite for risk to go long in platinum and palladium. They also like precious metals for yield recovery opportunities.
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