So far this year, gold prices have risen by about 33% and once approached $2800/ounce, becoming a shining star in the commodity sector. However, World Bank analysts believe silver is the precious metal to watch in 2025.

The World Bank recently released its updated commodity market forecasts. While it expects gold to continue to outperform the market, the latest forecasts indicate that analysts expect gold demand to weaken from next year through 2026.

Analysts in the report stated, "Within the forecast range, due to gold prices being at historical highs, demand from central banks and jewelry production (which together account for about two-thirds of global gold demand) may decline. Gold prices are expected to rise by 21% year-on-year in 2024, approximately 80% higher than the average level from 2015-2019 during the entire forecast period, but may slightly dip by 1% in 2025 and by 3% in 2026."

However, the World Bank believes silver has greater potential, as they expect growing demand and limited supply to support silver prices.

Analysts stated, "Silver demand is expected to steadily grow within the forecast range, benefiting from its dual nature of financial and industrial uses. As moderate supply growth lags behind strong demand growth, silver prices are expected to rise by 7% year-on-year in 2025 and by 3% in 2026, following an anticipated 20% increase in 2024."

These predictions from the World Bank were made at a time when silver prices have only recently begun to outperform gold. Silver prices have risen over 35% year-to-date and have found solid support above $32 per ounce. However, the gold-to-silver ratio remains relatively high, above 84.

Many analysts also expect silver to continue outperforming gold in 2025, as silver is believed to be severely undervalued compared to gold.

The World Bank is also optimistic about platinum, despite its poor performance this year. While automotive demand for platinum is expected to face challenges next year, the World Bank believes that as the supply gap widens, platinum prices have the potential to rise.

Analysts stated, "After an expected year-on-year increase of 4% in 2024, platinum prices are expected to rise by 5% in both 2025 and 2026, thanks to tightening mine supplies from major producers, particularly due to falling output in South Africa."

While gold may lag next year, the entire precious metals sector is considered a safe commodity bet. The World Bank expects base metal prices to remain relatively stable next year and decline in 2026.

Analysts stated, "It is expected that base metal prices will stabilize next year and then decline in 2026, as steady supply growth will offset long-term demand growth (including favorable factors brought by energy transition)."

The World Bank is the most pessimistic about the energy sector, expecting oil prices to decline by 6% in 2025 and by another 2% in 2026. Although geopolitical uncertainties may create some market volatility, analysts clearly see the risks of declining oil prices.

Analysts stated, "The long-term escalation of conflicts in the Middle East poses a significant upward risk to energy prices. Other upward risks include lower-than-expected North American oil production, intensified competition for liquefied natural gas cargoes, and sustained higher-than-expected consumption of coal and natural gas in Asia. However, there are also significant downside risks to energy prices, especially if OPEC+'s production cuts end sooner than expected, which could lead to an oversupply of oil, as well as slower-than-expected global economic growth."

Article reposted from: Jin Shi Data