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UBS raises silver price forecasts, expects outperformance vs gold

Published 06/06/2024, 12:36 am
© Reuters

UBS strategists have lifted their silver price forecasts, expecting that the white metal will outperform gold in the near term.

Now, the Swiss investment bank projects a 2024 year-end price target of $36 for silver and an average of $30.5, up 20% and 14%, respectively, compared to its previous forecasts.

“Our new silver price expectations reflect outperformance relative to gold, and show the gold:silver ratio falling towards the long-term average, which is currently ~68,” strategists noted.

“We think silver is well positioned to do well on a relative basis in an environment where gold prices are rising, the Fed is expected to ease policy, and market supply and demand fundamentals are tightening,” they added.

Industrial demand has surged, with solar demand growing significantly, accounting for over 40% of silver demand last year. Moreover, silver bar and coin demand has also increased markedly over the past decades.

Although there are concerns about a potential squeeze in the silver market, UBS believes there are ample silver stocks available. The strategists expect continued demand growth, particularly from the solar sector, and note potential downside risks to mine production.

The potential for lackluster gold prices over the next few months is likely to result in silver prices also giving back some of their recent outperformance. This, UBS says, should provide investors with better entry levels and a more attractive opportunity to position for further silver outperformance relative to gold in the future.

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