Silver Price Forecast
If gold is poised to hit the $1,400 to $1,500 range in 2015, the biggest question for investors is whether a silver rebound will follow. Other precious metals like Silver and Platinum have generally followed the gold price. Silver is currently trading near all time low levels and has toyed with a rebound for months. While silver prices typically follow in gold's footsteps, silver has fared worse than gold recently. Gold is down 37% since it peaked at $1,900 in 2011.
Silver has shed 67% since topping at $49 that same year. It was down 12% in 2014 alone - compared to gold's 1% drop. The dearth of new supply, increasing use in industrial activity and the narrowing of silver to gold ratio should provide the driver of silver's price. Mined silver supply growth through 2019E is low. Much of this growth is, like existing production, a result of the by-product output from gold, copper and zinc mines. In addition, zinc smelters in China are increasingly capable of processing silver from zinc concentrates, providing upside risk to supply expectations.
Meanwhile, still the industrial demand for silver remains at relatively low levels. However after more than 3 years of a brutal correction and subsequent consolidation, we believe silver is set to rise in 2015. We expect the Silver spot price to increase by more than 30% to $22 per ounce in late 2015
December gold GCZ5, -0.22% on Comex lost $2.90, or 0.3%, to settle at $1,112.70 an ounce, reversing earlier gains in the session. Still, the precious metal posted a weekly gain of 1.7%.
September silver SIU5, -1.19% also turned negative, losing to lose 19 cents, or 1.2%, lower to close at $15.21 an ounce. It posted a roughly 2.4% weekly gain.
Gold’s move on Friday comes as the ICE U.S. Dollar Index DXY, +0.24% which is a measure of the dollar’s strength against a basket of six rival currencies, turned higher on renewed expectations of a September interest-rate increase by the Federal Reserve.
A string of economic reports, including a reading on U.S. producer prices, as well as a solid industrial-production report on Friday, may be bolstering the case for a rate increase. A rate increase is good for the dollar but weighs on dollar-denominated metals including gold and silver.
Fawad Razaqzada, analyst at Forex.com, said “nothing has changed materially for gold’s near-term bearish fundamental outlook.”
“Indeed, I am expecting another sharp drop once the metal reaches a significant area of resistance around $1,131 [an ounce] or better still $1,143,” he said.
Gold had enjoyed a bounce from haven demand after China’s move to devalue the yuan. Beijing guided its currency lower for three straight days amid concerns about the health of the world’s second-largest economy.
In other metals, October platinum PLV5, -0.25% lost $1, or 0.1%, to end at $994 an ounce, with a weekly gain of about 3%, while September palladium PAU5, +0.20% tacked on $1.80, or 0.3%, to finish at $617.50 an ounce, for a weekly gain of about 3.4%.
Meanwhile, high-grade copper for September delivery HGU5, -0.42% was fractionally lower closing at $2.351 a pound, but still gained 0.9% for the week.