Silver's recent surge has forced a reassessment of near-term forecasts at Citi, which has upgraded its 0-3 month point price target to $150 an ounce. The bank's prior short-term target range of $0-100 an ounce - itself revised to $85 only two weeks ago - has been outpaced by the market's sharp advance, which has seen prices climb more than 30% over the past two weeks.
Momentum and Citi's outlook
Maximilian Layton, Global Head of Commodities Research at Citi, said the metal has already eclipsed the bank's earlier short-term expectation and that Citi now foresees further substantial upside. "We have been bullish silver both outright and relative to gold for many months, and remain so over the coming weeks," Layton said. He characterizes the move as being driven largely by capital flows rather than conventional supply and demand fundamentals, using the phrase that silver is behaving like "gold squared" or "gold on steroids."
Citi projects an additional 30% to 40% rise in the coming weeks, underpinning its revised 0-3 month target of $150/oz. The bank notes the rally should continue until silver becomes expensive relative to gold by historical measures.
Market evidence of the move
The rally has already pushed silver to an intraday record near $117.7 an ounce. Concurrently, the gold-to-silver ratio has dropped below 50, a development that supports Citi's long-standing view that silver would outperform gold during this cycle.
Layton highlighted additional drivers for the tactical bullish stance, pointing to elevated geopolitical risks and renewed worries about the independence of the Federal Reserve, both of which are contributing to heightened investment and speculative demand for the metal.
Geographic and instrument-level dynamics
Citi observes that China appears to be leading the rally, with India and wider global retail interest also contributing to upward pressure. Premiums in Shanghai and India have risen sharply as spot demand increased. At the same time, some typically bearish indicators have not restrained the advance - ETF holdings have fallen and Comex positioning has declined, yet prices continued to climb.
Chinese authorities have responded with measures intended to tighten conditions in domestic markets. Actions include suspending new subscriptions to the country's only silver ETF and raising margin requirements on the Shanghai Futures Exchange. Citi, however, does not expect these steps to meaningfully reduce retail investment demand. "We do not consider these measures to be sufficient in containing retail investment demand," Layton said, noting that Chinese retail investors tend to follow trends, which could further compress available supply if the rush continues.
Historical ratio scenarios and upper-bound estimates
Using historical relationships between gold and silver as a reference, Citi said a return to past lows in the gold-silver ratio could justify silver prices in the $160 to $170 per ounce range. The bank also noted a much more extreme theoretical scenario: revisiting the post-Bretton Woods low of a 14x gold-silver ratio recorded in 1979 would point to mid-to-high-$300 per ounce silver. Citi explicitly describes that scenario as "extremely unlikely."
Outlook summary
In short, Citi has upgraded its near-term silver target amid a rally hallmarked by strong capital inflows and retail demand, especially from China and India. The bank anticipates another 30-40% upside over the next 0-3 months while cautioning that very-high price outcomes remain improbable.
Key takeaways
- Citi raises 0-3 month silver target to $150/oz after prices exceeded the firm's prior near-term range.
- The bank expects 30-40% additional upside in the coming weeks, driven mainly by capital flows and retail investment rather than traditional fundamentals.
- Chinese-led demand and higher premiums in Shanghai and India are central to the rally, while domestic policy moves in China are not seen as sufficient to contain retail interest.