(MENAFN) The first quarter of the year saw significant movements in both precious and base metals. Among precious metals, gold emerged as the clear winner, gaining 8 percent, while silver saw a modest increase of 0.7 percent. In contrast, platinum fell by 7.2 percent, and palladium suffered a significant decline of 18.7 percent. The demand for gold increased due to expectations of a global economic slowdown in 2023, with investors seeking a safe haven.
IMF Director Kristalina Georgieva had already warned in January that the global economy was facing a difficult year, with one-third of the world economy expected to enter a recession due to the simultaneous slowdown of the US, EU, and China. This outlook contributed to the demand for gold, which is viewed as a reliable store of value during times of economic uncertainty.
In the base metals market, sharp movements were also observed in the first quarter. Copper and aluminum saw gains of 6.8 percent and 1.3 percent, respectively, while lead experienced a loss of 8.9 percent, nickel fell by 23.3 percent, and zinc decreased by 2.7 percent. The demand for copper, in particular, increased due to China's loosening of strict pandemic restrictions and incentives for the housing sector.
However, supply concerns related to copper production in Canada, Singapore, and Chile also came to the fore. The EU designated copper and nickel as strategic metals in the European Critical Raw Materials Act, reflecting positively on copper but leading to decreases in nickel. The US Geological Survey's research revealed that nickel production increased in 2022, but sharp fluctuations were seen in the nickel market due to news about the commodity company Trafigura in Singapore.
Trafigura faced a loss of half a billion dollars due to fictitious nickel exports, while the company claimed that it was the victim of "systematic fraud." The International Nickel Study Group revealed that there is an oversupply of the global nickel market. Similarly, the data showed that the gap in the global zinc market widened in 2022, while the proportion of total refined production declined.
The depreciation in energy prices also had an impact on the base metals market, with aluminum experiencing an increase in demand in the first quarter. The news that France-based aluminum smelter Aluminum Dunkerque increased its production to full capacity as energy prices fell was perceived as a positive development regarding economic activity in aluminum. Overall, the first quarter of the year was characterized by sharp movements in both precious and base metals, driven by a range of factors including global economic concerns, supply constraints, and fluctuations in energy prices.
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