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General Precious Metals
Can silver prices top gold's performance in 2020? Analyst watching improving demand
(Kitco News) Silver is looking to play catch-up to gold and potentially outperform the yellow metal next year, according to analysts, who are eying the U.S.-China trade progress and silver's improving demand as key drivers.
Both silver and gold had a stellar year despite dropping off its 2019 highs reached this fall. During the last 12 months, spot gold rose around 19% and silver advanced 16.9%, according to Kitco's aggregated charts.
Spot silver prices reached their 2019 peak at the beginning of September, trading above $19.60. At the time of writing, spot silver was at $16.99 and March Comex silver was at $17.07 an ounce.
The biggest drivers for silver next year will be the U.S.-China trade situation and global growth prospects, Standard Chartered precious metals analyst Suki Cooper told Kitco News on Tuesday.
"For silver, trade negotiations are one of the key risks. Given the impact, it has on industrial demand growth, economic growth, and outlook for the tech sector," Cooper said. "We do expect the Federal Reserve to remain on hold in 2020, but there will likely be continued concerns around the U.S.-China trade negotiations… Given that there is still negative-yielding debt on a global basis, this is likely to create a positive backdrop for safe-haven assets."
The outcome of Brexit will also play a key role, especially from the perspective of its impact on European growth, Cooper pointed out.
"For gold and silver, it is going to be the macro-environment that is a key driver," she said. "We think the trade tensions will be the underlying theme for the complex as a whole, whether that's going to impact industrial demand or auto sector growth. Or whether that triggers safe-haven interest in gold and silver."
Price projections for 2020
One of the more popular calls for silver next year is for prices to trade around $18 an ounce, with most gains set for year-end.
Silver could close next year around $17.50 an ounce, RJO Futures senior market strategist Phillip Streible.
The Dutch bank ABN AMRO projects silver to reach $18 an ounce by year-end after averaging $16.60 throughout 2020.
"We think that an aggressive sell-off in silver prices in the coming months will be an opportunity to position for higher prices later in 2020," ABN AMRO senior FX and precious metals strategist Georgette Boele said. "Silver prices will probably be more supported if global growth and global trade start to stabilize and improve somewhat."
Strategists at TD Securities see silver's potential peaking at around $20 an ounce next year. "Silver [could] jump to $20/oz by the end of 2020 in response to its firming fundamentals and spillover investment demand from the yellow metal," the bank's strategists told Kitco News.
"A lot of the drags on growth, such as print episodes of deleveraging in China, tightening in the U.S, all been flashed out. Going forward, we should see some improvement," TD Securities strategist Daniel Ghali added.
Standard Chartered is projecting for silver to average at $17.50 in 2020 and reaching a peak of $18 in Q2. Metals Focus said it sees silver averaging around $19.40 in 2020, with the potential to touch a high of over $22.
Silver could be looking at a fairly wide range next year, with support at $13 an ounce and resistance at just below $21, according to Kitco's very own senior technical analyst Jim Wyckoff.