Citi is boldly bullish: silver prices are expected to hit 90 US dollars/ounce in the next 6-12 months

The Zhitong Finance App learned that Citi reiterated its strong bullish stance on silver on Wednesday. It is expected that the price of silver is expected to rise to 90 US dollars per ounce in the next 6 to 12 months. The driving force comes from investment demand to replace weak industrial silver, but only if the Strait of Hormuz crisis eventually downgrades and the Federal Reserve's position changes to moderation.

The bank stated in the research report: “We expect that silver will continue to follow the trend of gold and has high beta characteristics, making it an ideal upward variety in a scenario where the Strait of Hormuz issue is resolved quickly.” At the same time, Citi emphasized that the flow of investment capital will dominate the silver price trend because demand for solar energy installations is facing a structural slowdown — on the one hand, due to battery thinning (thrifting), saving silver, and on the other hand, the accelerated spread of back-contact battery technology, further reducing the amount of silver per unit.

Despite recent macroeconomic headwinds, including higher real yields and a stronger dollar, Citi's basic scenario is that geopolitical tension will gradually ease, and the time window may be “as early as September to December.” The bank also anticipates that the global silver market will continue to be in deficit until 2027, thanks to rigid demand in artificial intelligence (AI), 5G infrastructure and electric vehicles; at the same time, the market share of back-contact batteries is expected to jump to dominant solar technology around 2028, and this transformation will profoundly reshape the industrial demand structure of silver.

In Wednesday's intraday, gold and silver futures both rose, mainly due to moderate US inflation data for July. According to data from the Ministry of Labor, the consumer price index (CPI) rose 3.4% year on year in July and rose slightly by 0.1% month on month, all in line with market expectations; previously, CPI fell 0.4% month-on-month in June. The data lowered the market's bet on the September rate hike.

Marex (Marex) analyst Edward Meir (Edward Meir) said in the report: “The CPI data is encouraging. Although it was higher than last month, it was in line with expectations. Combined with the weakening dollar and technical support, gold took advantage of the momentum.” According to the CME (CME) FedWatch tool, traders currently have a 40% chance of the Fed raising interest rates in September, which is lower than 46% before the data was released.

In terms of specific market conditions, the New York Mercantile Exchange's gold futures (August delivery) closed up 0.6% to 4,408.90 US dollars per ounce, recording a fourth consecutive day of increase and the highest settlement price since June 4; recently, silver futures (August delivery) rose 1.2% to close at 65.555 US dollars per ounce, closing at $65.555 per ounce, closing up on the 8th of the last 11 trading days, and set the best settlement level since June 18.

Overall, Citi believes that silver has both the safe-haven properties of gold and higher price elasticity. If the geographical and monetary policy environment warms up as expected, silver prices are expected to break out of an independent upward trend; however, investors also need to be wary of the potential impact of changes in solar technology on the long-term demand structure.