Silver prices witnessed a dramatic rise this year, after jumping by more than 30% over the past two weeks, in one of the most prominent stories in global markets. The continued rise means that prices are beating Citigroup’s short-term forecasts much faster than expected.
Maximilian Layton, head of global commodities research at Citi, said that the metal has already exceeded the target set by the bank for a period of 0-3 months at $100 per ounce, after it had raised it from $85 just two weeks ago. He explained that the bank raised its expectations again, anticipating a further strong rise in the near term.
Layton added that the bank “has been bullish on silver, both independently and compared to gold, for several months,” noting that the current rally is driven by capital flows more than traditional fundamental factors, describing the market movement as “gold doubled” or “gold activated.”
Citi now expects an additional rise of between 30% and 40% in the coming weeks, raising its price target for a period of 0-3 months to $150 per ounce. Layton indicated that the rise will continue until silver becomes historically high compared to gold.
The recent rise pushed silver to a record level within the session at about $117.7 per ounce, while the gold-to-silver ratio fell below 50, which reinforces Citi’s expectations that silver will outperform gold.
The bank believes the rise is being led by China, with India contributing and global demand from individual investors. Premiums in Shanghai and India rose sharply, despite classic bearish indicators such as a decline in ETF holdings and a decline in COMEX positions.
Chinese authorities began tightening measures, including suspending new subscriptions to the country’s only silver fund and raising margin requirements on the Shanghai Futures Exchange. But Citi does not expect these steps to significantly curb demand.
Layton stressed that individual investors in China tend to follow trends, which may increase market tightness.
