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Investor demand to drive silver prices higher in 2020 - Refinitiv

Kitco News

(Kitco News) - Silver prices are seeing a surge in momentum, and one research firm expects prices will continue to rise through 2020.

Silver prices are rallying 4% Thursday as the market continues to recover from last month’s massive sell-off that saw prices drop to an 11-year low. May silver futures last traded at $14.55 an ounce.

Analysts with the GFMS team at Refinitiv said in their 2019 review and 2020 outlook that they expect silver prices to average $15.75 an ounce this year, up sharply from current prices but down 3% from the average price from 2019.

“We expect prices to recover from current lows, driven by bargain hunting, before moving higher later in the year once the market hysteria calms down and safe-haven demand kicks in,” said Cameron Alexander, manager of precious-metals research at Refinitiv.

Looking to 2020, Refinitiv analysts said that industrial demand for silver is expected to suffer as the global economy has ground to a halt as a result of the COVID-19 pandemic. Nations around the world have instituted lockdown measures, forcing people to stay at home to slow the spread of the virus, which has infected nearly 1 million people and killed approximately 50,000.

However, investment demand will continue to dominate the marketplace, the research firm added.

“Industrial fabrication is set to take a hit this year, with losses expected across all the major sectors, with the rapid spread of COVID-19 disrupting supply chains globally and threatening to drag the global economy into downturn,” Alexander said.

“We expect positive inflows into silver ETPs [exchange-traded products] to continue this year. Demand for bars and coins is forecast to rebound by 24%, partly driven by a buying frenzy across all the major markets in Q1 as the silver price plunged to its lowest in more than 10 years, as well as a renewed investor interest in safe havens later in the year once global financial markets stabilize,” he added.

Looking at physical silver demand, the U.S. Mint saw unprecedented demand for its American Eagle silver coins last month, selling nearly 5.5 million one-ounce bullion coins. Sales are up almost 750% from the previous month.

U.S. bullion coin demand last month is up 550% from sales reported in March 2019.

Renewed interest in silver comes after a relatively dismal 2019. The analysts said that total physical demand for silver dropped by 2% last year to 1.035 billion ounces. The decline was led by weak industrial demand and poor global jewelry sales.

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