Citi remains bullish on silver prices, with analysts forecasting that the precious metal could climb as high as $90 per ounce within the next six to 12 months.
In a note to clients on Wednesday, the bank said stronger investment demand could become the main driver of silver prices, even as demand from some industrial sectors begins to soften.
Citi Maintains $75 and $90 Silver Price Targets
Citi kept its short- and medium-term silver forecasts unchanged.
The bank expects silver to reach around $75 per ounce over the next three months. Its six-to-12-month target remains at $90 per ounce, compared with a current spot price of roughly $65.
According to Citi, recovering investment flows could provide substantial support for silver over the coming months.
Investment Demand Could Drive the Next Silver Rally
Citi expects investment demand to strengthen if tensions surrounding the Strait of Hormuz eventually ease and the Federal Reserve adopts a less hawkish monetary policy stance.
The bank believes silver should continue moving broadly in the same direction as gold. However, silver’s higher sensitivity to market moves could potentially produce larger gains when precious metals rally.
As a result, Citi views silver as an attractive way for investors to gain exposure to a potential resolution of the Strait of Hormuz crisis.
Industrial Silver Demand Faces New Challenges
While investment demand could improve, parts of the industrial outlook for silver are becoming less supportive.
In particular, Citi expects demand from the solar industry to face structural pressure. Manufacturers are using less silver in solar cells, while newer back-contact, or BC, technology could further reduce the amount of silver required.
Therefore, investment flows may become increasingly important in determining the direction of silver prices.
Fed Policy and the Dollar Remain Key Factors
Silver has recently faced several macroeconomic headwinds, including higher real interest rates and a strong U.S. dollar.
However, Citi’s base-case scenario assumes that geopolitical tensions will ease. The bank suggested that de-escalation could potentially occur between September and December.
If that happens, some of the pressures currently weighing on precious metals could begin to fade.
Strong Indian Demand Supports Silver Prices
Demand from India is another positive factor in Citi’s silver outlook.
The bank highlighted a domestic silver premium of roughly 7% in India, indicating strong demand in the world’s important precious-metals market.
Citi expects buying activity to strengthen further during the fourth quarter as India’s festival and wedding season supports demand.
Global Silver Market Could Remain in Deficit
Citi also expects the global silver market to remain in supply deficit through 2027.
Demand from emerging technologies, including artificial intelligence, 5G networks and electric vehicles, should continue to support silver consumption.
At the same time, the adoption of back-contact solar technology is expected to accelerate. Citi believes BC technology could become one of the leading solar technologies by 2028.
Despite changing industrial demand trends, the combination of persistent supply deficits, stronger investment flows and continued demand from advanced technologies could provide significant support for silver prices over the coming years.
