Global economic developments, especially those in the euro zone and the US, drove price movements on the precious metals counters in 2012. Some of the metals clocked sharp gains and losses while others moved in a broad range.
Silver: Similar to 2011, silver closely followed the gold price movement through 2012. The manufacturing sector in the US and Europe did not see much revival during the year and data flow from China indicated a slowdown. As a result of this, prices of most of the industrial metals remained subdued in 2012. “Silver, which also has huge industrial usage, stayed well below its historic high levels,” said Vibhu Ratandhara, assistant vice-president for commodities at Bonanza Portfolio.
However being a more volatile metal than gold, silver moved sharper ups and downs and gave 18 per cent returns for the year in the international market and 21 per cent in the Indian market.
From the 2011 close of $27.60 per ounce, silver prices hit the year’s high of $35.75 in March. After gaining over 30 per cent in the first three months, the prices fell to $26 level in July. When all other asset classes spurted during September-October following the launch of a thirds round of quantitative easing measures by the US Fed and a bond buying programme by the European Central Bank, silver prices moved up to $35.50. By December, the prices ruled around the $32 level.
Platinum: Platinum is a rarer metal than gold and has been priced higher than gold historically. Around September 2011, when gold had moved up to a record level at $1,920 an ounce, platinum became cheaper than the yellow metal. In 2012 too, platinum continued to be cheaper than the yellow metal. On an annual basis, platinum gained 15 per cent in 2012. Almost 70 per cent of platinum is consumed for industrial purposes. Needless to say, the slump in industrial metals affected this metal too.
Like other precious metals, platinum followed the macro-economic developments and the mining issues in South Africa. The metal, which had closed 2011 at $1,394 per ounce, gained from the positive sentiments in the first few months of 2012. By February, the prices went up to a year’s high of $1,735. But by May, prices were once again at around $1380 level. After September, the prices has been moving in a range of $150 between $1,550 and $1,700. By the fag end of the year, platinum was priced at the $1,615 level.
Gold: Calendar 2012 was not a great year for the yellow metal as the returns were nothing compared with those in the previous years. Also, gold prices failed to break the historic high levels in the international market. Between December 31, 2011 and December 14, gold gave around eight per cent returns, whereas it was more than 30 per cent in 2011. In the Indian market, the returns were slightly higher at 14 per cent thanks to the rupee factor, but it was still less than that of 2011. “The Indian market saw gold move up to record levels a few times during the year due to a weak rupee,” said Tapan Trivedi, senior analyst at JRG Wealth Management.
Gold prices had closed at $1,580 per ounce in 2011 and in the first two months of 2012, the prices moved up to a yearly high of $1,802 in February. The prices went up to $1,799 in the first week of October and they came back to $1,700 level by the second week of December.
Outlook: “The unresolved issues in the larger economies will continue to plague the precious metals in 2013 as well,” said Trivedi. If the economic situation worsens beyond a point, even safe haven buying in gold is not likely. On the other hand, a faster growth in the Chinese economy and some stability in the euro zone will benefit the precious metals counter, especially platinum and silver. As for gold, central bank buying and surging investments in exchange-traded funds can take the prices past the high of 2011 and possibly to the $2,000 level as well. The weakness and strength in the dollar will continue to impact gold prices. zz