Even though stubbornly high inflation and solid economic data have dashed hopes of an early shift to monetary easing, investor interest in silver improved in Q1, 2024, particularly from March onwards. In part, this reflected optimism that the start of a rate cutting cycle is now in sight, a message reaffirmed by the Fed after its March meeting.
With fresh record high gold prices, speculative inflows into silver picked up rapidly on expectations that the white metal would play catch-up. A rebound in base metal prices also provided an additional boost in sentiment towards silver. Assuming inflation will continue easing, we expect the Fed will make three 25bps policy rate cuts this year, the first one likely to occur mid-year, and signal a generally dovish outlook for 2025.
Said in the World Silver Survey 2024, “The subsequent fall in yields, especially in real terms, should favor precious metal investment as we progress into H2, 2024. Even with the recent retreat, a still high gold:silver ratio will also attract some investors who view silver as undervalued over the long term, perhaps also as its strong fundamentals gain attention.”
The extent of its recovery, however, may be restrained by a weak Chinese property sector!
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