Unlike in 2021, when both gold and silver ended the year lows, gold has returned 7% and silver has returned 5% in 2022 (the year so far). According to the latest Precious Metals Quarterly Report by Motilal Oswal Financial Services, gold is expected to trade in the range of USD 1,800 to USD 2,050 from a 12-month outlook on COMEX (The Commodity Exchange Inc.). Silver price is expected to move towards USD 26.45 and USD 27.15 with strong support near USD 24.20 and USD 23.70. With a buy strategy on the dips, the rally is likely to extend above $30 in the next 12 months.
In 2021, Silver ETFs (exchange traded funds) saw an overall outflow of 865 tonnes. In 2022, silver ETFs have seen inflows of 17,975 tonnes so far. “Demand consumption may also start from the renewables sector. The full story around decarbonization at COP26 and the entire ESG transition taking place in the economy will drive demand for green technologies,” says the report. According to the Silver Institute, silver market may be short of supply in 2022. De-carbonization push and efforts regarding growth in aggregate industrial demand.
The report also pointed out that the gold/silver ratio, which went from a high of 127 in 2020 to a low of 65 last year, is hovering around the range of 75-79. Technically, this has created a good picture for gold, however, if silver picks up then the ratio could fall and gold prices could move to one side.
On the domestic front, investors now have the option of investing in Silver ETFs (recently launched), which can also be a contributing factor to the metal prices.
The report’s authors have this to say about gold: “A certain level of exhaustion is approaching, and the bullish bias may not deliver the same kind of returns as in the past. Due to the Fed’s aggressive stance on interest rates and yield spikes.” Along with the macro side resistance has already started.” On the other hand, they give positive signals for gold such as rising oil prices indicating higher inflation, rising geopolitical risks and weak growth. Forecast. Any developments on Russia-Ukraine tensions, however, will keep investors on edge. “Following a cautious approach, book profits at fixed intervals and use bounce to exit long for the next few quarters,” the report explains. On the other hand, thanks to silver’s safe haven, along with several factors that will drive demand for the metal, the report maintains its positive bias for silver for the next quarter. It suggests re-adjusting your portfolio by reducing the weight of gold and increasing the weight of silver.