Precious Metals: A World Bank Outlook

Author: Jon Clarke - Bullion & Economics Editor

Published: 28 Oct 2020

Last Updated: 2 Feb 2023


The recent publication of the World Bank’s Commodity Markets Outlook report, provides in-depth market analysis and price forecasts for precious metals.

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The effects of the global COVID-19 pandemic have dealt a huge blow to markets but the effects have been varied depending on the type of commodity. This is a marked difference to the global recession of 2008-2009 which saw persistent declines in all commodity prices.

While energy and crude oil prices dropped sharply in the first two quarters, both rebounded later in the year even though energy prices are still below their pre-COVID levels.

Precious metals prices rose in part due to currency depreciation and lower interest rates.

Relevance of Persistent Commodity Shocks

The World Bank’s report suggests that policy makers consider how further disruptions maybe continue in the short and long term. These long-term shocks, the Bank suggest, may require a “long-term adjustment to a new economic reality”.

Transitory and permanent shocks affect different sectors in different ways. Transitory shocks which originate form recessions or natural disasters and accidents; such as the Global Financial Crisis (GFC) or the drought-related grain and coffee shortfalls in 1975, 1985 and 1995. Longer-term shocks are often attributed to technological improvements which increase productivity and subsequently lower price.

The effects of such shocks which have effects on both supply and demand, are believed to have a much longer impact on the oil market that the metal market, due in part to a quicker-than-expected rebound in China’s industrial sector.

Precious Metals Developments


Gold prices rose for 8 consecutive quarters with a 12% rice in the 3rd quarter of 2020. Demand for exchange-traded fund (ETFs) also increased three-fold year-on-year as we reached the second quarter of 2020.

The disruption of gold mining in South America and South Africa, due to the pandemic, supported higher prices, which are expected to remain mostly stable as the global economy attempts to recover from the coronavirus.


Silver made the greatest increase of metals with a 7-year high of £22.66 an ounce in August. Despite its March plunge into GFC-lows, its rebound was driven partly by factors similar to gold but also its industrial applications.

Gold-silver ratios dropped to 75 in September from its March peak of 125 but was above its long-term average. Prices for silver will reportedly fall around 14% in 2021.


Platinum also benefited from a safe haven appeal, but also due to its application in the automotive industry and some supply disruptions. Prices are expected to remain stable throughout 2021.

The report does give deeper insights and forecasts however they apparently neglect to include political and inflationary factors into their models.

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