Europe and us to dominate precious metals market

Photo: US Geological Survey

The precious metals market is forecast to grow in the coming years, driven by a rise in demand from Europe and the Americas.

New research predicts that the market will grow 4 per cent CAGR between 2015 and 2019, as sales climb for gold, silver, palladium and platinum. Gold has had a rocky period in recent months and years, as its appeal as a safe haven has been buffeted by global financial uncertainty and political turmoil, as well as improving economic conditions in the US and a strengthening dollar.

Platinum, however, remains in strong demannd due to its use in the industrial sector. Indeed, platinum is now forecast to be the major driver of growth in the precious metals market.

One factor in the sector's future is a ban on mining the metals: the release of toxic gases and dust can negatively impact the health of workers, which has led to the activity being prohibited in countries such as India, Cuba, Iran, Israel and Libya. Nonetheless, the amount of precious metals produced globally is also forecast to climb, from 1.3 billion ounces in 2013 to 1.59 billion in 2019.

While platinum will be a key driver in the market's future, silver is also an increasingly important player, accounting for 86 per cent of the market during 2014. This is thanks to its use in photovoltaic devices, as well as its central role in the jewellery sector. The US, China, India, Japan, and Russia were the top five consumers of silver during 2014.

India has traditionally been one of the biggest markets for precious metals, particularly for gold. The study, though, predicts that both Europe and the Americas will overtake and dominate the precious metals market during the coming four years.

"Financial institutions are increasingly investing in precious metals because precious metals are speculative in nature, and may either move in prices either up or down, depending on the bankers expectations," says the report.

Technavio / Commodity Online