In a note to its clients on Wednesday, Citi analysts reaffirmed their bullish outlook for silver prices, indicating that the metal could rise to $90.00 an ounce within the next six to twelve months, driven by growing investment demand against a declining industrial picture.
The firm kept its set price targets unchanged at $75.00 per ounce for the 0-3 month time range and $90.00 per ounce for the 6-12 month range, compared to a spot price of $65.00 per ounce.
Citi expects the recovery in investment demand to continue, driven by a possible easing of tensions in the Strait of Hormuz, along with a less hawkish stance from the Federal Reserve.
Citi noted that silver should continue to follow gold's trajectory with a high beta coefficient, making it an ideal bargaining chip in the event of a swift resolution to the Strait of Hormuz crisis.
The organization expects investment flows to dominate price trends, while demand for solar energy faces a structural slowdown due to conservation and the adoption of back-contact (BC) cell technology.
Silver has faced economic headwinds including rising real yields and a strong dollar, but Citi's baseline scenario is based on a cooling-off, perhaps as early as September and December, which would remove those pressures.
The firm also pointed to strong demand in India, reflected in a local price premium of around 7%, which provides additional support for prices, with expectations of increased demand in the fourth quarter due to the holiday season.
Citi expects the global silver market to remain in deficit until 2027, supported by strong demand from the artificial intelligence, 5G and electric vehicle sectors, while the adoption of BC technology is accelerating to emerge as a leading technology in the field of solar energy by 2028.
