World Bank Commodity Report: Gold and Silver Will Gradually Decline, but Unlikely to Return to Historical Lows

FX168 Finance November 6—— According to the World Bank's Commodity Markets Outlook published in October, gold and silver are expected to experience a significant surge in 2026 and then gradually pull back in the following years, though prices will remain at historically high levels. Gold is expected to show stronger resilience, supported by central bank gold purchases and investment demand; silver, meanwhile, faces greater downward pressure due to negative factors on the industrial side, such as the substitution of photovoltaic materials. The report points out that there are both upside and downside risks, with the policies of the Federal Reserve and the geopolitical landscape as key variables. The overall commodities market also faces inflationary disruptions caused by geopolitics and climate events.

The latest October World Bank Commodity Markets Outlook report forecasts that gold and silver prices will gradually correct in 2027 and 2028, but will still remain at historically high levels, making a repeat of the 2026 surge and high volatility unlikely. The fundamentals of gold and silver are showing a clear divergence: gold is supported by central bank buying, while silver is being dragged down by changes in industrial demand.

Price Forecasts Revised Downward, The Gold & Silver Rally Takes a Pause

This report is slightly more bearish than the April edition. It forecasts that the average gold price in 2026 will be $4,600 per ounce, up 33.6% from 2025; in 2027, the gold price will fall by 7.6% to $4,250, and in 2028, it will decline another 5.9% to $4,000.

Silver has outperformed gold this year, with a full-year average price expected at $70, up nearly 76%; however, it is projected to experience deeper corrections, falling to $62 in 2027 and $58 in 2028.

The overall precious metals index is up nearly 40% this year, but is set to retreat in the following two years. Even after the correction, prices will still be far above the 2015-2019 average. Gold prices fell 5% in the third quarter, as rising U.S. Treasury yields, tighter monetary policy expectations, and a strong U.S. dollar weighed on precious metals.

Gold's Fundamentals Remain Solid, Silver Facing Industrial Demand Pressure

The main drivers for gold are investment demand and central bank purchases. In the first half of 2026, investment demand plus central bank buying account for half of global gold demand—even though the growth rate of demand will slow over the next two years, the foundation remains solid. After cooling at the start of the year, central bank gold buying has picked up again, providing extra support for gold prices. However, high prices have suppressed jewelry consumption, and demand for gold jewelry has continued to weaken since 2023. On the supply side, gold mine output is limited, and high prices are stimulating increased gold recycling.

Silver’s situation is more complicated, with industrial demand serving as a key variable. The photovoltaic industry is attempting to substitute silver with copper and improve manufacturing efficiency, which is curbing silver consumption; demand for silver jewelry and tableware is similarly constrained by high prices. Silver demand in electronics, data centers, automotive, and power infrastructure continues to grow, but only provides limited support. Silver mining output has slightly increased, recycling rates are also rising, so the tight supply-demand situation will gradually ease.

Upside and Downside Risks Balanced, External Shocks Will Shape the Trend

The World Bank states that the upside and downside risks for gold and silver price forecasts are relatively balanced. An escalation in geopolitical tensions, increased market volatility, or central bank gold purchases that exceed expectations could all push prices above the baseline forecasts. The greatest downside risk is continued monetary tightening by the Federal Reserve and other major central banks; high interest rates and a strong U.S. dollar will continue to erode the appeal of non-interest-bearing assets such as gold and silver.

Additionally, a weakening global economy could hit industrial demand for silver, and profit-taking or deleveraging could further amplify selling pressure.

Overall Commodities Outlook: Inflation Pressure Risks Persist

Looking at the entire commodities market, disrupted energy supplies and geopolitical uncertainty are projected to drive overall commodity prices up by 23% this year, with a 7% pullback expected in 2027. The Middle East conflict and El Niño’s impact on agricultural production are the two main disruptive factors; various risks may also interplay, pushing up energy and food prices and posing challenges for global inflation and monetary policy.

Conclusion

The surge in gold and silver in 2026 is likely to come to an end, with moderate corrections expected over the following two years. Gold is more resilient thanks to central bank purchases, while silver faces greater downside from factors such as substitution in the photovoltaic industry. Geopolitical developments and Federal Reserve policy remain the core variables determining whether precious metals can strengthen again.


Spot Gold Weekly Chart Source: Yihuitong

GMT+8 November 6, 10:43 Spot Gold quoted at $4,064.58/oz