Citigroup has maintained its bullish stance on silver in a recent report, setting a price target of $75 per ounce for the next 0 to 3 months and $90 per ounce for the next 6 to 12 months. With silver currently trading around $65, this implies nearly 40% upside potential.
The bank argues that the sustained recovery in investment demand will increasingly become the core driver of silver's price trajectory. This suggests that the next phase of silver's rally will no longer rely primarily on accelerating industrial consumption but rather on whether investors further boost their allocations to precious metals.
The correlation between silver and gold also underpins Citigroup's bullish outlook. The bank expects silver to continue following gold's directional moves but with higher "beta," meaning that when precious metals rally broadly, silver could see even greater gains. If tensions in the Strait of Hormuz de-escalate quickly, Citigroup believes silver could emerge as an ideal upside candidate in the precious metals market. The bank anticipates that U.S.-Iran tensions could ease as soon as Q4 2025.
Meanwhile, high real interest rates and a strong dollar have previously weighed on silver's performance. If the Federal Reserve pivots to a more dovish stance, leading to falling real yields and a weaker dollar, the allure of precious metals could strengthen, potentially driving capital inflows into silver.
Regarding industrial demand, Citigroup's assessment is not entirely optimistic. Solar photovoltaics, a key silver consumer, face ongoing reductions in unit silver usage as cell manufacturers adopt more efficient technologies. The bank projects that back-contact (BC) technology penetration will accelerate and could become a mainstream technology by 2028, which may cap future silver demand growth from the solar sector.
However, demand from AI, 5G infrastructure, and electric vehicles is expected to provide fresh support. Due to silver's superior electrical conductivity, these technology sectors maintain strong demand for the metal. Citigroup forecasts that the global silver market will remain in a structural deficit at least until 2027.
India could emerge as a key variable for near-term physical demand. As one of the world's largest silver consumers and heavily reliant on imports, India's imports plunged after implementing a new silver import licensing system in May. However, supply is gradually recovering as some traders and banks receive permits. Bloomberg data shows India imported approximately 89.81 tonnes of silver through the India International Bullion Exchange (IIBX) in August, after six consecutive months of no imports.
Still, supply recovery remains slow. Harshal Barot, Chief Consultant at Metals Focus, noted that about 400 tonnes of import permits may have been approved, improving India's silver supply compared to July. However, as of last Friday, local silver prices in India still commanded a 4% premium over the 30-day average international rate.
India's new rules require each imported silver shipment to be accompanied by a government-certified document proving origin, a requirement different from past routine shipping documents. This has caused delays in customs clearance even for traders who have obtained permits. Renisha Chainani, Chief Research Officer at Augmont Enterprise, pointed out that even after permits are approved, shipping, customs clearance, and refining still take several weeks. Currently, the Indian market relies more on existing inventory and sporadic supply rather than a genuine return to normal imports.
Additionally, with the approaching festive and wedding season in the second half of the year, Indian jewelers may begin rebuilding inventories, further boosting physical demand.
Comments