Gold, silver and platinum prices recorded declines in the third quarter of 2022, compared to the immediately preceding quarter, according to the World Bank‘s precious metals index.
Overall, this index fell 9%, on a like-for-like comparison.
The decline was driven by weak investment and physical demand due to a stronger U.S. dollar and rising interest rate yields.
At the same time, according to the World Bank, these factors have offset the positive impact of safe haven demand related to the war in Ukraine and rising inflation.
In particular, silver prices fell sharply (15 percent) due to the slump in industrial demand, while gold and platinum prices both fell 8 percent.
Silver
After an expected decline of 4% in 2022, the index is expected to fall 4% in 2023 on expectations of historically high interest rates and concerns about the possibility of a global recession weighing on industrial activity.
Gold prices fell 8% in Q3 2022 (quarter-over-quarter rate) as rising interest rates and U.S. dollar appreciation outweighed concerns about rising inflation and geopolitical risks.
The U.S. Federal Reserve has raised policy rates five times this year by a total of 3 percentage points, causing the U.S. dollar index to rise 16% to a 20-year high.
Meanwhile, the yield on 10-year Treasury Inflation-Protected Securities (TIPS) reached its highest level since February 2011, raising the opportunity cost of investing in zero-yielding assets.
As a result, the World Bank refers gold exchange-traded fund holdings have fallen for five consecutive months.
Physical gold demand rebounded slightly, but remains weak by historical standards.
World demand
Silver prices plunged 15% in the third quarter of 2022, driven by weak industrial demand and the same macroeconomic and monetary policy factors affecting gold.
More than half of global silver demand comes from industrial applications.
While PV demand continues to grow, demand for consumer electronics has weakened considerably, and global electronics production fell for the fifth consecutive month in September.
New export orders for manufactured goods have also declined sharply in both advanced and emerging market and developing economies.
The World Bank expects weak physical and investment demand to keep silver prices under downward pressure. Silver prices are forecast to fall 16% in 2022 and remain low in 2023.
In the long term, silver will benefit from the energy transition, particularly through its use in photovoltaic solar cells.
Platinum prices fell nearly 8% in the third quarter of 2022, weighed down by the same monetary and macroeconomic factors affecting other metals, notably high interest rates and weak industrial and jewelry demand amid a global economic slowdown.
Demand for automobiles – where platinum is used in catalytic converters – is recovering, but remains below pre-pandemic levels.
