Precious metals have been prized for their beauty and rarity for thousands of years. In modern times, they have also become popular as investment vehicles, with demand driven by a variety of factors including economic uncertainty, inflation concerns, and geopolitical tensions. In this article, we will examine the current state of precious metals demand and what factors are driving it.
Gold is the most well-known precious metal and has been used as a store of value for centuries. In recent years, gold has enjoyed a surge in demand, driven in part by concerns about the global economy. The COVID-19 pandemic has caused a great deal of economic uncertainty, with many investors seeking safe havens to protect their wealth. Gold is often seen as a reliable store of value in times of economic turmoil, and this has led to a significant increase in demand for the precious metal.
According to the World Gold Council, global gold demand reached 3,759.6 tonnes in 2020, up 4% from the previous year. Investment demand was the largest driver of this increase, with investment demand for gold rising by 40% to a record high of 1,773.2 tonnes. The demand for gold was particularly strong in Europe and North America, where investors were seeking safe havens in the face of economic uncertainty.
Another precious metal that has enjoyed a surge in demand in recent years is silver. Like gold, silver is often seen as a safe haven investment, but it also has a wide range of industrial uses. In fact, around half of all silver demand comes from industrial applications, such as electronics, solar panels, and medical equipment.
In 2020, global silver demand reached 896.1 million ounces, down 4% from the previous year. However, investment demand for silver surged by 8% to a record high of 200 million ounces. This was driven by strong demand from retail investors, who were attracted by the lower price of silver compared to gold. In addition, there was also increased demand from institutional investors, who were seeking to diversify their portfolios in the face of economic uncertainty.
Platinum and palladium are two other precious metals that are in high demand, particularly in the automotive industry. Both metals are used in catalytic converters, which help to reduce emissions from vehicles. As the world becomes more focused on reducing emissions and combating climate change, demand for these metals is likely to continue to increase.
In 2020, global demand for platinum reached 7.2 million ounces, down 18% from the previous year. This decline was largely due to the impact of the COVID-19 pandemic on the automotive industry, which is a major consumer of platinum. However, demand for platinum is expected to rebound as the global economy recovers and demand for new vehicles increases.
Demand for palladium, on the other hand, has been extremely strong in recent years. In 2020, global demand for palladium reached 10.1 million ounces, up 4% from the previous year. This was driven by strong demand from the automotive industry, particularly in China, where emissions regulations are becoming increasingly strict.
In addition to these four metals, there are also a number of other precious metals that are in demand, including rhodium, iridium, and ruthenium. These metals are relatively rare and have a wide range of industrial applications, including in the production of electronics and chemicals.
So, what is driving demand for precious metals? There are a number of factors at play, but one of the main drivers is economic uncertainty. With the global economy still recovering from the impact of the COVID-19 pandemic, many investors are seeking safe havens to protect their wealth now more than ever!