Gold and silver to shine despite likely US rate hikes

It would be wrong to write off gold this year purely on the basis that the Fed is likely to start to raise interest rates, probably in June. We expect the withdrawal of monetary stimulus in the US to be gradual, leaving plenty of scope for other, more positive factors to dominate. These include further monetary easing elsewhere and strong demand from emerging economies. Indeed, the prospect of a further escalation of the crisis in the euro-zone suggests that the risks even to our (above-consensus) forecasts for the gold price lie on the upside.

This is the first edition of a new monthly publication which summarises our views on the fundamental drivers of precious metals markets. Here the focus is on gold and silver, but future editions will also include more about the platinum group metals. We start with a brief review of gold demand trends last year, drawing on a detailed report published this week (12th February) by the World Gold Council (WGC).