- Citi upgraded silver's 0-3 month price forecast to $150 per ounce from $100
- Silver rallied over 30% recently, surpassing Citi's earlier price targets
- Strong physical supply tightness and capital shifts support Citi's bullish view
Brokerage firm Citi has turned more bullish on silver, upgrading its 0 to 3-month price forecast to $150 per ounce, from $100 earlier. They've cited strong momentum, capital reallocation into precious metals, and tightening physical supply conditions as the key reasons. Silver has rallied more than 30% over the past two weeks, quickly surpassing Citi's earlier bullish call of $100/oz, which had been raised to $110/oz only recently. The metal is now trading well above those levels, prompting the brokerage to reassess the scale and durability of the rally.
Citi described silver as behaving like 'gold on steroids', driven by investor capital rotating away from gold as silver still appears relatively cheap on historical metrics. While gold prices have also climbed sharply, Citi argues that silver's valuation discount to gold leaves room for further catch-up.
The brokerage estimates another 30-40% upside in silver prices over the coming weeks, taking its near-term target to $150/oz. Historically, retracing prior peaks relative to gold would place silver in the $160-170/oz range, and in extreme scenarios, even higher-though Citi stresses such outcomes are less likely.
Supply Tightness and Investment Demand in Focus
Citi's bullish stance is underpinned by continued tightness in physical silver markets, particularly in major US trading hubs. The brokerage expects heightened geopolitical risks and renewed concerns around financial independence to sustain strong investment and speculative demand in the near term.
Importantly, silver's supply-demand balance has been in deficit for consecutive years, with the market relying heavily on existing stockpiles. Citi notes that investors holding physical silver appear unwilling to sell at current levels, limiting available supply even as prices rise.
The rally since December-during which silver prices have roughly doubled-has been led by China, with India and broader global retail demand also contributing. Citi pointed to persistently high premiums in Shanghai compared with London, alongside rising premiums in India, as indicators of strong physical demand.
Why Bearish Signals Haven't Derailed Prices
Citi acknowledged several traditionally bearish indicators, including falling ETF silver holdings, declining investor positioning in COMEX futures, and rising exchange inventories. However, the brokerage believes these factors have been overwhelmed by stronger short-term momentum and physical market tightness.
Citi highlighted the gold-to-silver price ratio, now trending toward the sub-50x level, as evidence of how stretched silver prices have become. While this underscores the speculative nature of the rally, the brokerage believes momentum could persist until silver becomes clearly expensive relative to gold.
The key downside risk flagged by Citi is profit-taking from Chinese investors, particularly around the Lunar New Year period. However, the brokerage noted that this risk is still a couple of weeks away.
ALSO READ: Silver Outpaces Gold with 22% CAGR — What Does It Mean for Retailers?
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