Silver prices hit multi-month highs

Silver prices reached a new high in ten months, approaching $26 per ounce. Since the end of February, the metal has risen in price by almost 15%. This occurred against the backdrop of a less significant increase in prices for other precious metals (5–11%). The bullish move comes against the backdrop of expectations of a Fed rate cut, positive macroeconomic statistics from China, and a continued shortage of silver in the market.

According to Investing.com, on April 2, silver prices on the spot market approached $26 per troy ounce for the first time since May 2023. During trading, the price reached $25.9 per ounce, a ten-month high. This result was 3.4% higher than the closing value on April 1. A confident rise in quotes, with short breaks, has continued since the end of February, during which time the price of the metal has risen by almost 15%.

The increase in the price of silver occurs against the backdrop of a more moderate rise in price of other precious metals.

Thus, the price of gold has increased over the month by more than 11% and in the last three days has regularly updated its historical maximum, consolidating above the level of $2,260 per ounce. Platinum quotes rose only 5%, to $922.5 per ounce, palladium added 7.7%, to $999.5 per ounce. Platinum group metals have been trading near these values ​​for the third month in a row.

The increase in the cost of silver, as well as other precious and non-ferrous metals, over the past month is associated with expectations of a reduction in the Federal Reserve rate, believes Alfa Capital portfolio manager Dmitry Scriabin: on March 20, the American regulator, as analysts expected, kept the rate at the current level. However, according to traders surveyed by the CME FedWatch Tool, there is a 68% chance of a rate cut in June.

The rapid growth rates of silver quotations are associated with strong data on the Chinese economy, since the main consumer of the metal is industry, and primarily the production of electronics. In March, the Caixin manufacturing PMI in China rose to 51.1 points. In February, the indicator was at 50.9 points. The market expected growth, but only to 51 points.

Manufacturing activity has been growing for the fifth month in a row, which is positive for commodity prices, including silver, notes BCS World of Investments stock market expert Lyudmila Rokotyanskaya.

In the future, the cost of metals will also be determined by the state of the Chinese economy and the monetary policy of the Federal Reserve. An additional driver for rising silver prices, says Daniil Bolotskikh, leading analyst at Digital Broker, is the fact that the metal may be in short supply due to production, which has been lagging behind consumption for the fourth year in a row.

Experts at The Silver Institute & Metals Focus estimate that the deficit in 2024 will decrease by 9% compared to 2023, to 176 million ounces, but will still be high by historical standards.

As a result, according to Daniil Bolotskikh, the price of silver has a chance to exceed $27.5. At the same time, the expert believes that the price of gold, against the backdrop of high demand from central banks, could rise to $2,500 per ounce.

Vitaly Gaidaev