Although gold, silver, and the industrial metal copper have all retreated from historic highs, their trading prices are still hovering near historical highs, and analysts expect them to strengthen over the next 12 months.

Gold is expected to reach a new high

Spot gold is currently hovering around $2,350 an ounce. ANZ said in a recent report that the price of gold has maintained its upward trend against the backdrop of a further weakening of the US dollar and falling US Treasury yields. But it's not over yet.

An ANZ strategist wrote: “Although geopolitical risks continue to support safe-haven demand, the rise in gold prices was largely due to the sharp increase in demand for gold in China in the first quarter of 2024.”

China is currently the main consumer of gold, surpassing India in 2023 to become the world's largest buyer of gold and jewellery.

According to data from the World Gold Council, Chinese consumers have also been leading the trend of gold purchases. They bought 603 tons of gold jewelry last year, an increase of 10% over 2022. The World Gold Council predicts that demand for jewelry in China will remain high this year, even higher than in 2023.

UBS strategists raised their gold price forecast in a report last week. It is expected to rise to 2,500 US dollars per ounce by the end of September and to 2,600 US dollars per ounce by the end of the year. The reason the bank is bullish on gold prices is because strong demand from China, combined with a series of weak US economic data in April, caused the market to reprice the Fed's interest rate cut prospects.

Higher interest rates tend to put pressure on gold, as it makes US Treasury bonds (which are also a safe-haven asset) a more attractive option for investors.

UBS precious metals strategist Joni Teves (Joni Teves) said in an interview on CNBC's “Asian Street Signs” program on Monday: “We think the price of gold can continue to reach new highs.”

Silver actually outperforms gold in an advantageous position

What about silver, the “poor relative” of gold? Although silver often plays a “supporting role” for gold, the two are positively correlated in terms of price, although silver usually lags behind.

Nikos Kavalis (Nikos Kavalis), managing director of precious metals research and consulting firm Metals Focus, told CNBC via email: “Silver's performance may have been more interesting — it has finally successfully caught up with gold.” He explained that as the market became more reassured and convinced of the gold bull market, more and more investors were turning to silver.

Last week, against the backdrop of heightened investor interest and tight supply, the price of silver broke through $32 per ounce, a record high of more than ten years.

“We believe that silver is actually the precious metal that can benefit the most from rising gold prices. There's a strong correlation between the two.” Tevez said.

She added that when the Federal Reserve relaxes its policy, silver will be “in a position to actually outperform gold,” especially when supply and demand fundamentals remain tight.

Daniel Hynes (Daniel Hynes), senior commodity strategist at ANZ Bank, said: “Slowing silver production growth and strong industrial demand indicate that supply is lagging behind demand, which will cause the market to fall into a structural deficit.”

Silver is widely used in industrial applications and is commonly used in the manufacture of automobiles, solar panels, jewelry, and electronics.

Cavallis also pointed out that other precious metals such as platinum, palladium, and rhodium have all experienced shortages this year, so they should support prices.

Copper consolidated first, then returned to the uptrend

Copper prices also recently ushered in a glorious moment. They hit a record high of $10,857 per ton last Tuesday, then declined somewhat.

ANZ said that as supply restrictions intensify, copper prices will be “well supported by tight supply” this year. As production falls short of expectations, the International Copper Research Organization (ICSG) has drastically lowered its copper oversupply forecast for this year.

Last November, after a Supreme Court ruling and nationwide protests over environmental issues, First Quantum Minerals (First Quantum Minerals) halted production at the Cobre Panamá copper mine, one of the world's largest copper mines. Anglo American (Anglo American), one of the world's leading mining companies, said it will cut copper production in 2024 and 2025 in order to cut costs.

Citigroup strategists said in a report earlier this month: “Strong gains in industrial metals and precious metals underpin financial and physical investments and bullish sentiment,” adding that this is a “world of bullish metals.”

The investment bank's current basic forecast is that copper prices will consolidate within the next three to six months, but there is still room for further growth, depending on the degree of easing by the Federal Reserve and the recovery of the global manufacturing industry.

Citigroup strategists said, “We are still convinced that the price of copper will reach 12,000 US dollars per ton in the next 12-18 months, and in our bull market forecast, the price of copper will reach 15,000 US dollars per ton.”

Editor/Somer