Leading global precious metals trader Heraeus has recently released its forecasts for the precious metals sector during the first half of 2016, predicting a stronger demand for gold, a rise in the prices of silver and continued sluggishness in platinum and palladium.

The company says that the global economy this year will be primarily shaped by the US Fed rates, but in the case of the precious metals, and anticipated increase in US rates and a stronger dollar have already been largely factored in by investors. The report states that the US economy is, in fact, recovering much more slowly than it has done from recession in the past, and the actual increase in Fed rates may be lower than what the market has anticipated.

The decline in the price of gold in recent years has already led to some mine closures and a slowdown in new projects, so there will likely be a slight drop in mine supply in 2016, says Heraeus. Both India and China may see increased demand, with the lower oil prices also resulting in greater disposable incomes for jewellery and precious metal purchases. While ETF outflows may slow, investor demand may not move significantly. The company is cautiously optimistic about prices and predicts possible “temporary price dips .....below the magic 1,000 $/oz mark” and a trading range of “between 970 $/oz and 1,250 $/oz” in the first half of 2016.

In silver, the Company believes that there will be “a physical supply-demand deficit.... (for) the third time in a row”. Global industrial demand, jewellery demand and investment demand are all expected to grow, leading to higher silver prices in 2016. During the first half of 2016, prices will range between 12.50 $/oz and 17.00 $/oz, trading on average at 15.25 $/oz, the Company says.

Platinum, which lost almost a third of its value in 2015 to hit a seven year low is not expected to revive significantly, though demand in India may grow. Prices will hover between 750 $/oz and 1025 $/oz, trading on average at around 890 $/oz in the first half of the year.

Similarly, palladium, which had a disappointing 2015 may not see any quick turnaround, the Company says. Prices in the first half will range between 450 $/oz and 650 $/oz with an average of 550 $/oz.