Precious Metal Shortage 2022
The price of platinum has fallen significantly since February. The demand for rhodium will most likely suffer due to the chip shortage. Compared to platinum and silver, rhodium prices are vulnerable to a chip shortage. So, what should we expect for the future? Here are a few predictions:
The price of platinum has fallen significantly since February.
Platinum prices have dropped significantly since February, and many investors are wondering why. This is because it is used in the autocatalyst segment, which has seen a slowdown over the past several years, particularly after the Volkswagen diesel emissions scandal. Diesel cars have long been popular in Europe, but their use is set to decline as the trend toward electric vehicles increases.
In addition to lower demand, the metal is experiencing a severe supply shortage. A shortage of metal would result in a glut of metal in the market, and that would hurt prices.
The price of rhodium is most vulnerable to the chip shortage.
The global automotive industry is a huge consumer of both rhodium and palladium. The industry uses these metals in catalytic converters. A chip shortage is expected to affect chip production by the third quarter of 2021 and will likely continue through 2022 and possibly into 2023.
The shortage of both rhodium and palladium is likely to continue until at least the second half of 2021. However, the weakness in auto sales in recent weeks has lowered supply fears. The chip shortage is now expected to extend well into Q4 2021, making these metals less susceptible to a price drop than they would have been if they were still in high demand.
The chip shortage has had a knock-on effect on car output and the price of other commodities. The precious metals used in catalytic converters are becoming more valuable as thieves target them. Even a single ill-gotten catalytic converter can fetch $50 to $250 in a recycling facility. As a result, the global automotive industry is expected to suffer a $210 billion loss from the chip shortage in 2021, according to AlixPartners. However, this figure is lower than the initial forecast of $60.6 billion by AlixPartners in late January.
Demand for precious metals in 2022
In the last year, demand for precious metals has slowed. This is partly due to rising interest rates. Moreover, the stronger U.S. dollar has hurt the value of other currencies. Geopolitical issues like the Russian invasion of Ukraine and soaring inflation also weigh on prices.
Nonetheless, some analysts believe that the demand for precious metals will continue to grow. The shift toward green and sustainable technologies will generate significant sales and financing opportunities, especially in Asia, North America, and Europe. The automotive industry currently uses a modest amount of precious metals, but this impact is expected to grow over the next several years as the production of these vehicles increases. In 2022-2031, the passenger car segment is projected to have the greatest demand for precious metals. Platinum and palladium are expected to lead the market because of their high durability.
Moreover, silver demand will be helped by the easing of COVID-19 restrictions. In addition to this, the demand for jewelry will continue to grow. However, this growth will be slowed down in early 2022 by the Omicron wave. Additionally, silverware fabrication is expected to increase by 21 percent this year. This increase will be largely driven by India.
Price of silver
The precious metal shortage in 2022 will likely trigger the price of silver to rise. In general, the price of silver will increase by around five to 10 percent. The shortage is expected to be small compared to the total supply in 2022. Investor sentiment will be driven by the anticipation of a tightening cycle, and the uncertainty regarding the post-pandemic global economic recovery will restrain industrial demand. However, a robust recovery in metal supply is expected to alleviate the fundamental deficit, resulting in a more balanced market in 2022.
Silver’s supply and demand will be driven by several factors, including strong industrial fabrication and rising vehicle electrification. Furthermore, the European Commission president recently announced a mandate to increase the amount of rooftop solar panels in the next five years. This will increase demand for silver, which is mainly used to manufacture P.V. panels.
Price of gold
The Price of Gold is expected to drop in the next few months as investors shift to U.S. bonds that offer yields below 2%. While this is a bad sign for the metal, it will likely be the catalyst for a short-term price correction. Furthermore, it is important to remember that the price of gold is already up over 40% since the beginning of 2018. The price of gold is due to hit $1,800 per ounce in the first quarter of 2021, and the price is expected to drop to $1,750 per ounce in 2022.
According to the World Gold Council, the global supply of gold is about 80% less than the demand. However, the global demand for gold is projected to increase by 10% in 2021. This is the result of increasing global demand from central banks. Central banks bought about four hundred and thirty tons of gold in 2021, increasing global gold reserves to an unprecedented level. In addition, retail consumption increased by nearly 10% in 2021, and gold consumption in jewelry fabrication and tech products.