ABN Amro economists have considerably upgraded the outlook for the United States economy, and now predicts a small surge in US treasury yields and 10-year US real yields, while the US dollar is anticipated to gain at a medium pace.
In the latest report, they have now downgraded silver and believe that gold prices have already peaked and might drop going into the future. However, they are still positive for palladium and platinum.
“We expect silver prices to decline with gold prices because slightly higher US nominal and real yields and a higher US dollar are also negative for silver prices. Moreover, long silver is a crowded trade as well (as gold is). But we expect silver prices to be more resilient than gold and to outperform gold.”
This happened since silver has a considerable industrial demand component. The analysts now expect a significant recovery in the industrial industry, which will support silver prices.
Many continue to believe that platinum prices have the biggest upside potential in 2021. The positive outlook for the US economy is strong for platinum. On the other hand, higher US yields and a dovish Fed are negative for platinum. Also, a modest dollar is negative for the metal. All these factors will make the general price outlook for platinum less bullish than it happened previously.
“We still expect higher palladium prices this year. Palladium is the most cyclical precious metal. Thus, the stronger economic outlook in the US will support palladium prices. Palladium prices are less sensitive to developments in US rates and the dollar, but these factors still have some impact.”
Eventually, many now expect higher prices due to increased demand for palladium from the car catalysts and the industrial economy. However, the rise is expected to be more modest.