Gold can ‘float’ to $3,600, but it won’t outperform silver and platinum - MKS’ Nicky Shiels
NEW YORK (August 20) The gold market continues to hold solid support above $3,300, but it's only a matter of time before it trades to new all-time highs above $3,500, according to one market strategist.
On Wednesday, Nicky Shiels, Head of Research and Metals Strategy at MKS PAMP, raised her precious metals forecast through year-end as she expects traditional factors - including impending rate cuts - to support higher prices.
In her updated note, Shiels said she sees gold prices averaging around $3,200 an ounce this year, up 8% from her initial forecast. At the same time, she expects prices to hit a high of $3,600 an ounce by the end of the year.
“We are entering a new era of fiscal dominance (record gov debt & increasing borrowing costs to put CBs - not only the Fed! - under pressure); the US, Europe & China are fiscally stimulating with 6% budget deficits the new norm. Markets' focus will revert somewhat back to traditional drivers (eg: macro-economic data, Fed) away from tariff-specific headlines -- it's “back to basics” into year-end,” she said in her note. “The markets’ focus should pivot from trade deals (neutral - bearish) to a slower US economy & faster Fed cuts (bullish).”
Not only are the expected Federal Reserve rate cuts likely to continue weakening the U.S. dollar, but Shiels said geopolitical uncertainty will also continue to drive the global dedollarization trend.
“The U.S. does not have the means NOR the will to maintain the past unipolar world, which is transitioning from an unbalanced multipolar to a more balanced multipolar world,” she said. “The world is short on (US) trust and short on havens.”
She added that the U.S. dollar's dominance in global financial markets is also threatened as President Donald Trump tries to exert more pressure on the central bank, damaging its perceived political independence.
“The thinking that the ‘US is becoming more EM’ with Turkish-style monetary policy, Chinese-style industrial policy and with growing questions around the independence of the US Federal Statistical System (re: BLS leadership), puts Gold in pole position as a ‘USA hedge,’” she said.
While Shiels expects gold prices to “float” higher through the second half of the year, she sees more potential in other precious metals, raising her outlook for silver, platinum, and palladium.
Although she expects silver to eventually test resistance at $42 an ounce this year, unchanged from her initial forecast, she has revised her average annual price to $38 an ounce, up 10% from her initial estimate.
“The post Liberation Day average price revisions (lower) were too bearish,” she said. “The negative effect of an expected trade war on economic growth and thus industrial demand was overstated (or too early…). Persistent tightness related to industrial demand (1m lease rates have averaged ~2% since Liberation Day 1.0) and reflation trade kicking into higher gear should drive outperformance in 2H’25.”
Platinum is also attracting Shiels' attention as she significantly upgraded her annual price forecast to $1,350 an ounce, up 38% from her previous estimate.
She added that she sees platinum prices testing resistance at $1,600 an ounce in the second half of the year.
“The bull case in Platinum (vs our base case - both outlined in the Annual Outlook in Jan ‘25) has played out earlier than expected,” she said. “We were way too bearish (too early?) on PGM demand being negatively impacted by auto-related trade tariffs and the broader negative effect of a trade war on economic growth & industrial demand; instead, regional & strategic stockpiling of critical metals like PGMs have ensured higher floors. The deep & sustained backwardation across both Platinum ingot & sponge markets indicates broad-based deficits; the current lack of availability (or propensity for holders to let go of metal) is clearly contingent on higher prices.”
Shiels also sees palladium prices averaging around $1,140 an ounce this year in her latest forecast, with prices testing resistance at $1,350 an ounce.
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