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World Bank Thinks Gold and Silver Have Seen Their Best Days In 2018

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(Kitco News) - The gold market may have put in its best performance of the year as the first quarter came to an end and investors looking for higher silver prices might be disappointed this year, according to the latest report from the World Bank.

In its semi-annual report, released last month the international bank for banks, said its Precious Metals Price Index saw a 4% increase in the first quarter, following marginal growth in the first quarter of 2017.

The gains in the first three months of the year were due to a 4% rally in gold and a 6% rally in platinum prices. The analysts noted that the two metals were pushed higher because of “expectations of rising inflation, growing geopolitical tensions, and a weaker U.S. dollar.”

Silver prices were only slightly higher in the first quarter of 2018, compared to its gains during the same period last year.

“Silver prices edged higher on declining mine production and despite relatively weak investment demand compared to the other two metals,” the World Bank said.

Looking ahead, the analysts said that they expect silver prices to struggle through the rest of the year. The comments come as silver price remain trapped in a narrow trading range. July silver futures last traded at $16.59 an ounce, down 2.6% since the start of the year. 

“Silver prices are forecast to ease slightly on moderating industrial demand,” the report said. “More than half of silver consumption goes to industrial use. Demand from the photovoltaic and electronic sectors remains strong, but is being eroded by substitution and more efficient production techniques that use less silver.”

Turning to gold, the World Bank said that it is only forecasting a 3% gain for the yellow metal in 2018, which indicates the market doesn’t have much upside from current prices. Gold prices also remain stuck in the middle of its trading range. June gold futures last traded at $1,319.10 an ounce, up 1% since the start of the year.

“Upside risks to the forecast include deepening geopolitical tensions, delays in central bank rate increases, and a weaker-than-expected dollar. Downside risks include stronger economic growth, rising equity markets, a stronger dollar, and an easing in geopolitical tensions,” the analysts said.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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