At the beginning of the month, we cautioned investors about September’s historical challenges for the precious metals market. However, it seems that this seasonal trend has been broken, at least for 2024.
While discussing curses may break the first rule of superstition, this year appears to be an exception. December gold futures recently peaked at $2,700 an ounce. Despite a nearly 1% decline from that record high, the metal remains poised for growth, concluding the week with a robust close around $2,670 an ounce. This marks a notable monthly gain of 5.6%, the best performance since March, when the streak of record highs began.
Gold’s impressive run is certainly worth noting, but it’s essential to also consider other precious metals. Silver, despite facing volatility in recent weeks, is beginning to gain traction. After hitting a 12-year high of $33 an ounce, December silver futures settled at $31.74 on Friday, down almost 2% for the day. However, over the past week, silver has still managed to rise by 4.6% and boasts an impressive 8.8% increase this month.
Year-to-date, gold prices have surged by 28.8%, while silver has outperformed with a nearly 32% increase. Silver’s renewed momentum this week can be attributed to China’s aggressive stimulus measures, which aim to revitalize its economy, long impacted by the COVID-19 pandemic. The Chinese government is injecting liquidity into financial markets and lowering interest rates in a bid to combat deflation and achieve its growth targets.
This economic support is particularly beneficial for silver, as a significant portion of its demand—almost 50%—comes from industrial applications, especially photovoltaic solar panel manufacturing. The Silver Institute estimates that silver demand from solar panels will account for about 19% of global silver demand this year, translating to approximately 232 million ounces.
However, caution is warranted, as some analysts believe that China’s stimulus might be insufficient and arrive too late. Economists at Capital Economics project that these measures may only boost GDP by about 0.4 percentage points. “The stimulus measures are no silver bullet for the structural challenges facing the sector, so we expect any increase in industrial metal prices to be temporary,” noted Kieran Tompkins, a Climate and Commodities Economist at Capital Economics, in a Friday report.
Meanwhile, platinum is also starting to show promise. October platinum futures are on track to close the week above $1,000 an ounce, marking the highest level in nearly 10 weeks. Analysts consider platinum an undervalued asset when examined through a fundamental lens.
This week, the World Platinum Investment Council revised its long-term supply deficit projections upward. Between 2025 and 2028, the average platinum supply deficit is expected to be around 769,000 ounces, an increase from the previous estimate of 546,000 ounces reported in January.
According to the WPIC, “The combination of resilient demand, supply-side risks, and a diminishing stockpile enhances platinum’s appeal as an investment opportunity.”
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