Gold has been the shining star in the commodity space, with prices rallying around 33% so far this year and reaching near-record highs of $2,800 per ounce. However, analysts at the World Bank suggest that silver may be the precious metal to watch in 2025.
In its updated commodity market forecast, the World Bank expects gold to continue outperforming the broader sector, but anticipates weaker demand in the coming years. The analysts cite record-high prices as a factor that is likely to ease demand from central banks and jewelry production, which together account for about two-thirds of global gold demand. They project gold prices to increase by 21% in 2024 and remain around 80% higher than the 2015-2019 average through the forecast period, with a slight decline of 1% in 2025 and 3% in 2026.
On the other hand, the World Bank sees greater potential for silver, driven by growing demand and constrained supply. They expect silver demand to grow steadily, fueled by its dual financial and industrial uses. With modest supply growth lagging behind strong demand, silver prices are projected to rise by 7% in 2025 and 3% in 2026, following an expected 20% increase in 2024.
These predictions come as silver prices have recently started to outperform gold, with a more than 35% increase so far this year and solid support above $32 per ounce. Many analysts expect silver to continue outperforming gold through 2025, as it is seen as significantly undervalued compared to the yellow metal.
The World Bank is also optimistic about platinum, despite this year’s price struggles. Although platinum’s automotive demand is expected to face challenges in 2024, the analysts see potential for price gains as the supply deficit grows, with a forecast-ed increase of 4% in 2024 and 5% in both 2025 and 2026.
While gold may lag in the near future, the precious metals complex as a whole is considered a safe commodity bet. In contrast, the World Bank anticipates relatively flat base metal prices next year and a decline in 2026, as steady supply growth is counterbalanced by secular demand growth, including tailwinds from the energy transition.
The World Bank is most bearish on the energy sector, projecting oil prices to fall by 6% in 2025 and another 2% in 2026. However, the analysts caution that geopolitical uncertainty may create some market volatility, with potential upside risks from factors like lower-than-expected North American oil output and increased competition for liquefied natural gas cargoes. At the same time, they see substantial downside risks, such as an earlier-than-expected unwind of OPEC+ supply cuts and weaker-than-expected economic growth.