Silver has dropped back again this year. But strategists at Commerzbank expect increasing Gold prices to lift Silver too.
Supply deficit likely to shrink on Silver market
“Global demand is likely to decrease as compared with its record high last year. Growing supply is anticipated at the same time: mining production is expected to reach its highest level since 2016 and the supply of scrap Silver to post the highest level in a decade.”
“As these two effects combined will probably mean that the supply deficit this year will not be even half as high as it was last year, the Silver Institute sees little potential for pronounced price rises this year. With its cautious prediction of an average price of $23 this year, it is more sceptical than we are.”
“We expect rising Gold prices in the second half of the year to pull up the Silver price too.”
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Global Metal Markets Likely To Be Bolstered By Rising Gold Prices In The Second Half Of The Year
Recent forecasts estimated by Commerzbank suggest that the balance of global metal markets will be significantly bolstered in the second half of this year by rising gold prices, pulling silver along with it.
Analysts and pundits continue to be bullish on the outlook for gold prices over the next several months, underpinned by a variety of factors. At the heart of the bullish outlook for gold is the likely easing of monetary and fiscal policies by major global central banks in response to slow economic growth, particularly from US-China trade tensions. The strengthening US Dollar is a major factor as well, in part due to the prospect of a much anticipated US rate cut from the Federal Reserve later this month.
This environment of low-interest rates and loose monetary policy are expected to support gold, particularly during periods of heightened geopolitical tension. This includes continued unrest in the Middle East and the trade friction between the US and China, which remain heightening investor demand for the safe-haven metal. As the price of gold continues to rise, it is expected to pull silver up with it, in line with the step-relationship over the past few years.
Recent estimations anticipate that gold could easily breach the 1,500 USD/oz. mark by the end of the year on the back of strong investor demand and increased liquidity. This undoubtedly has been priced into silver markets already, which is expected to soon begin to mirror the gains expected to be made by gold.
It has similarly been suggested that the precious metal price uptrend could extend into 2020, putting silver even more sharply in focus next year. This could lend further tailwinds to the silver market, potentially pushing prices higher across the board.
Given these forecasts, the outlook for the global metal market in the second half of this year is overwhelmingly bullish, with investor sentiment on the precious metal market likely to remain strong. Time will tell if this expectation will be met, however, for the time being, the outlook for metal markets appears strong.