Precious Metals Prices: Here’s What’s Happening Beyond Gold

MajorsOct 18, 2021

Precious Metals Prices: Here’s What’s Happening Beyond Gold

National Jeweler looks at how prices of platinum, palladium, and silver have performed in 2021.

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New York—The metals market has had a wild ride over the past year and a half. 

Economic concerns combined with supply deficits due to COVID-19 affected production, which meant the price of precious metals were mostly up through the end of year and even into 2021.

But with a new year came new issues that have brought mixed results.

Here’s what’s been going on in the precious metals market beyond gold, which National Jeweler dove into in August.

One of the biggest factors affecting the price of platinum-group metals—platinum, palladium, and rhodium—is the continued global semiconductor chip shortage.

As demand for the chips has far outpaced supply, there’s been a slowdown in automobile manufacturing, hurting the metals, which are used in catalytic converters.

Platinum’s price has been on a downswing in recent months, Kitco charts show, averaging $1,008.29 in August, followed by $975.18 in September and an average of $988.67 so far in October.

This contrasts with a strong performance last year when the metal was boosted by supply shortages and hopes for economic recovery.

It crossed the $1,000 mark in December to hit a four-year high and ended the year with a monthly average of $1,025.89. It continued the rise to peak at $1,214.00 per ounce in May.

Platinum has suffered less than its sister metals this year though, in part because demand continues to come from investors, Bloomberg reports.

Demand also continues to come from the jewelry sector.

Platinum jewelry continues to do well in most markets, especially when it comes to branded collections, according to the Platinum Guild International’s Q2 2021 Platinum Jewellery Business Review. 

The report shows strong consumer spending supported by vaccinations and economic recovery brought “remarkable growth” in U.S. platinum sales to fuel a positive sentiment in the trade in the second quarter.

Platinum jewelry sales from PGI partners in the region doubled, while ounce sales jumped by 48 percent compared with the same quarter last year, driven by “considerable” growth in gemstone fashion jewelry and bridal jewelry, PGI said.

Additionally, more retailers have created dedicated platinum programs, leveraging the metal to capture high-spending consumers and benefit from higher ticket prices.

Palladium and Rhodium

The same issues bringing platinum down also are affecting palladium and rhodium.

The chip shortage and automobile production slowdown have hurt palladium, which is mostly used in catalytic converters for gasoline-powered vehicles to help control emissions.

Palladium’s price has dropped below the $2,000 mark for the first time since mid-2020.

After dropping more than $400 per ounce at the onset of the pandemic, the metal rose steadily again throughout 2020 to finish December with an average of $2,345.05.

According to Kitco, it reached a high of $3,000 per ounce at one point this May, as supplies rallied back from last year’s mine and refinery closures.

But brought down again by the chip issues, it has averaged $2,537.90 per ounce in August, $2,112.18 in September, and $1,990.70 per ounce so far in October.

Experts are predicting it will continue its slide, possibly hitting in the $1,500-$1,600 price before making a sharp rebound thanks to an imbalance between supply and demand. 
Rhodium, the most expensive precious metal, has been hit hardest, with its price reeling as the chip shortage carries on. Demand for the metal, after all, comes almost entirely from the automobile industry, according to multiple sources. 

 Related stories will be right here … 

Its price has had arguably the biggest swings since the start of the pandemic, at which time it went from an average price of $10,205 per ounce in February 2020 to $7,568 per ounce in March 2020.

It finished the year with a December average of $13,991 and continued an upswing for several months, peaking at $25,981 per ounce in April 2021.

It was then it started its downswing, averaging $17,302 in August, $13,282 in September, and $12,850 so far in October, according to Kitco.

The silver price often moves in tandem with gold’s, and its path this year has followed a similar trajectory.

After dipping at the start of the pandemic last spring, it rose again steadily until it reached a peak in September of $28.89, according to Kitco charts.

It then dropped again and leveled out for the remainder of 2020, finishing the year with a December average of $24.89 per ounce.

It swung between about $29 and $24 during the first half of 2021—briefly passing $30—but since mid-June has been on a steady decline downward.

So far in October, the white metal has averaged $22.64 per ounce.

The outlook on silver jewelry remains bullish.

According to a survey conducted on behalf of the Silver Promotion Service, 42 percent of retailers said they saw an increase in silver jewelry sales in 2020.

The survey also indicated 89 percent of retailers are optimistic those sales will continue to grow, and according to the Silver Institute, global silver jewelry demand is forecast to rebound to 174 million ounces this year, a 17 percent increase over last year’s 148.6 million ounces though still below pre-COVID levels.

One silver expert recently told Kitco he thinks $30 per ounce could happen within the first half of 2022, leading to a jump to $50 per ounce soon after.

James Anderson, CEO and chairman of Guanajuato Silver Company, meanwhile, told the metals news site he thinks the price of silver could surge to $40 an ounce by mid-2022.

“If we have a weak economy coupled with a drive towards needing and using more silver, you’re going to have base metal mines shutting down that produce silver as by-product, just as an enormous demand for silver comes to the fore,” he is quoted as saying.

Looking ahead, there are numerous factors in play that will continue to affect metals prices.

The chip shortage isn’t expected to end any time soon.

On the other hand, concerns about energy supplies during winter and the U.S. government opening major West Coast ports for 24 hours a day to relieve supply chain issues could bring inflationary price pressures and, along with them, a bullish outlook for the metals market, Kitco argues

Brecken Branstratoris the senior editor, gemstones at National Jeweler, covering sourcing, pricing and other developments in the colored stone sector.

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