Retail investors see silver prices rallying more than 50% in 2023 to $38 an ounce

Welcome to Kitco News' 2023 Outlook Series. Uncertainty continues to dominate financial markets as central bank monetary policies push the global economy into a recession to cool down inflation. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2023.

(Kitco News) – The silver market is preparing to end 2022 on a strong note and bullish sentiment among retail investors indicates the rally is just getting started.

This past year has been fairly volatile for the silver market as rising inflation forced the Federal Reserve to aggressively raise interest rates, driving bond yields to a 10-year high and the U.S. dollar to a 20-year high.

During a lackluster summer, silver prices fell to a multi-year low below $18 an ounce; however, shifting expectations surrounding the Federal Reserve's monetary policy stance propelled the grey metal higher in the fourth quarter.

Silver has rallied nearly 38% from its August lows as it looks to end the year just below $24 an ounce. According to Kitco News' latest 2023 Outlook Survey, retail investors see even higher prices through 2023.

This past week 1,482 people participated in Kitco News' online survey, asking investors where they see silver prices by the end of the year. On average retail investors see silver prices rising to $38 an ounce.

Sentiment among retail investors is also significantly more bullish than indicated by the headline number. Only 85 participants, roughly 5% of the vote, said they saw silver prices ending 2023 below $23 an ounce.

Meanwhile, nearly 48% of participants expected silver prices to end the year higher than $38 an ounce.

Jeff Kresnak, Middleville, Michigan, said in an email to Kitco News that he sees silver prices double in 2023, which would put prices well above $40 an ounce by the end of the year.

"The industrial metal will also be used as a hedge against inflation and the stock market," Jeff said. "I personally believe silver had a boat anchor attached to it because crypto was weighing it down. I believe 90% of the people in 2022 that were over-optimistic on crypto have had enough bloodshed; they will not return to crpicypto and will now jump into silver."

Retail investors are significantly more bullish on silver compared to Wall Street analysts. While most analysts are looking for silver to rally, most are expecting prices to trade below $30 an ounce.

Jim Wyckoff, senior technical analyst at Kitco.com, said that he sees silver prices trading in a range between $22.00 to $27.31 an ounce.

Most analysts are bullish on silver as the green energy transition drives industrial demand for the industrial metal.

Bank of America analysts, who are extremely bullish on gold, see silver prices peaking around $25 an ounce.

"Investors usually look at silver both through a macro, but also a micro lens: On the macro side, a Fed pivot and stabilization of USD should make the precious metal more attractive; meanwhile, on the micro side, a stabilization of industrial offtake may help," wrote Michael Widmer, commodity strategist for Bank of America in his outlook report.

Commerzbank also sees silver prices pushing to $25 an ounce.

While most analysts are moderately bullish, there are some who expect to see prices double next year.

In an interview with Kitco news, Avi Gilburt, founder of ElliottWaveTrader.net, said that silver is embarking on a major bull rally that could see prices push back to its record highs of $50 an ounce.

"I'm looking for a pullback towards the $21, $22 region in silver to set up the next major rally," he said. "Long-term, I'm looking for silver to hit $50, but that might take a few years. Prices could easily double in 2023 and the first half of 2024."

 Silver price to beat gold in 2023? Precious metal plays catch-up on strong demand, ETFs remain missing puzzle piece

By Neils Christensen

For Kitco News

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Gold, silver boosted by weaker greenback, bullish charts

Gold and silver prices are higher in midday trading Thursday, supported by a sell-off in the U.S. dollar index on this day. Bullish near-term chart postures for both metals continue to invite the technically based speculators to the long sides. February gold was last up $7.10 at $1,823.10 and March silver was up $0.36 at $24.20.

Global stock markets were flat to weaker overnight. U.S. stock indexes are solidly higher at midday. The marketplace has been quieter this week following the Christmas holiday and just ahead of the new year. There has also been a dearth of major fundamental news and economic data this week.

The World Gold Council reports central bank gold buying at the highest rate since 1967, with Russia and China likely the leaders. “Sanctions on Russia and strained relations between the West and China have led to both countries adopting a policy of ‘de-dollarization’ to rely less on the policies of the U.S. central bank and government,” said broker SP Angel in a morning email dispatch. According to the World Gold Council, central banks bought 399 metric tons of gold in the third quarter, compared to 186 metric tons in the first quarter and 88 metric tons in the first quarter of 2022. Officially, Turkey led buying with 29 metric tons in the third quarter, though many central banks including China and Russia do not always report gold holdings.

The other key outside market today sees Nymex crude oil prices lower and trading around $78.00 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.83%.

Technically, February gold futures bulls have the firm overall near-term technical advantage. A seven-week-old uptrend is in place on the daily bar chart. Bulls’ next upside price objective is to produce a close above solid resistance at the $1,875.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,782.00. First resistance is seen at today’s high of $1,825.00 and then at this week’s high of $1,841.90. First support is seen at today’s low of $1,811.20 and then at $1,800.00. Wyckoff's Market Rating: 7.0.

March silver futures bulls have the solid overall near-term technical advantage. Prices are in a four-month-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at $22.735. First resistance is seen at the December high of $24.525 and then at $24.80. Next support is seen at $24.00 and then at this week’s low of $23.645. Wyckoff's Market Rating: 7.5.

March N.Y. copper closed down 140 points at 382.85 cents today. Prices closed near mid-range. The copper bulls have the overall near-term technical advantage. Prices are in a three-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 394.70 cents. The next downside price objective for the bears is closing prices below solid technical support at 370.00 cents. First resistance is seen at Wednesday’s high of 387.30 cents and then at 394.70 cents. First support is seen at 380.00 cents and then at 375.00 cents. Wyckoff's Market Rating: 6.0.

By Jim Wyckoff

For Kitco News

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Gold price weighs incoming data and hawkish Fed comments as 2023 quickly approaches

With just one week to go until 2023, gold is down just over 1% year-to-date after a very volatile year that saw the precious metal rise above $2,000 an ounce in the spring and hit lows near $1,630 an ounce in the fall.

February Comex gold futures were looking to close Friday at around $1,809 an ounce, up 0.5% on the week.

Gold may have put in an enduring price bottom in 2022, according to Bloomberg Intelligence senior macro strategist Mike McGlone. "We see gold as a top performer in 2023, particularly if weakening broad commodities goad the Federal Reserve to begin easing," McGlone said Thursday.

Gold could move above $2,000 an ounce in 2023 and "never look back," McGlone added. "This is our base case for the precious metal, notably as the Fed shifts from the highest-velocity tightening period in 40 years toward easing … Gold has had an upper-performance hand vs. the industrial metal since 2006, when the U.S. two-year/10-year curve last recovered from a period of inversion," he said.

The focus this week was on digesting the latest GDP, PCE price index, durable goods, and home sales data.

"This week's data showed that the U.S. economy is ending the year on a mixed note. The housing market generally showed further signs of deterioration in November, and data on durable goods orders were generally weaker than expected, when backward revisions to previously released data are taken into account. That said, data on consumer confidence shows that consumers are less downbeat at present than they were a few months ago," economists at Wells Fargo said.

Markets are trying to put together an outlook for the beginning of next year, with data showing mixed signs of a slowing economy, cooling inflation, and a still hawkish Federal Reserve.

This is the puzzle that gold is trying to get ahead of as it enters the new year.

"Federal Reserve Chairman Jerome Powell has been trying to sell investors a notion that interest rates will have to be higher for longer than previously assumed to keep inflation under control," said CIBC Capital Markets senior economist Andrew Grantham. "However, financial markets aren't buying it, with interest rate cuts still being priced in for late 2023 and bond yields well off their earlier highs."

Powell told markets in December that after raising rates by 425 basis points in 2022, the Fed is still not restrictive enough, and rates will have to remain higher for longer.

But analysts are interpreting that in different ways. "What higher-for-longer does mean is that central banks will likely react later and less aggressively to downside growth surprises and recession risks than they have in the past, due to lingering inflationary concerns. That new reaction function is the reality that markets will have to start buying into at some point during 2023," Grantham said Friday.

The trend market participants are watching is how fast inflation cools down, and growth slows. "Data on Friday confirmed that PCE inflation fell further in November, and a new rent inflation series published this week by researchers at the Cleveland Fed adds further weight to our view that inflation will continue falling sharply in 2023," said Capital Economics senior U.S. economist Andrew Hunter.

This week's macro surprise was the final reading of the Q3 GDP, which showed growth at 3.2% versus the previous estimate of 2.9%. The stronger-than-expected result weighed on gold, pushing prices closer to the $1,800 line.

In the meantime, the Fed's preferred measure of inflation — the annual core PCE number — cooled to 4.7% in November after October's 5% reading.

Next week is a holiday week between Christmas and the New Year, and it promises to be quiet. But the first week of the new year kicks off with several key releases, including nonfarm payrolls, which the Fed is currently monitoring very closely.

Market consensus calls are looking for the U.S. economy to have added 200,000 positions in December and for the unemployment rate to remain at 3.7%.

Other data to keep an eye on is the ISM manufacturing and services PMI, which are also scheduled for the first week of January.

"We expect both of the ISM activity surveys to have fallen in December, pointing to a continued slowdown in GDP growth, and we are provisionally penciling in a softer 200,000 gain in nonfarm payrolls," Hunter noted Friday.

Gold's technical set-up shows a six-week-old uptrend, according to Kitco's senior analysts Jim Wyckoff.

"Bulls' next upside price objective is to produce a close in February futures above solid resistance at $1,900.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at $1,823.00 and then at this week's high of $1,833.80. First support is seen at this week's low of $1,892.70 and then at $1,882.00," Wyckoff said Friday.

 

Data to watch in the next two weeks:

December 28: U.S. pending home sales

December 30: U.S. jobless claims

January 4: U.S. ISM Manufacturing PMI

January 5: ADP nonfarm employment change, U.S. jobless claims

January 6: U.S. nonfarm payrolls, U.S. factory orders, U.S. ISM non-manufacturing PMI
 

By Anna Golubova

For Kitco News

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Gold, silver pressured by upbeat U.S. data

Gld and silver prices are solidly lower in midday U.S. trading Thursday. The metals market bulls today are feeling the heat of a U.S. economy that does not seem like it wants to slide into a recession any time soon, following stronger-than-expected U.S. data released this morning. February gold was last down $21.10 at $1,804.30 and March silver was down $0.399 at $23.795.

Weekly U.S. jobless claims did not rise as much economists were expecting. Initial jobless claims rose slightly to 216,000, lower than the 222,000 forecast. The final third-quarter gross domestic product readings were surprisingly strong. The Q3 GDP came in at up 3.2%, versus the consensus forecast for a rise of 2.9%. Personal consumption expenditures were up 4.3% in the third quarter and the core PCE was a bit higher than expected at up 4.7 percent.

Today's U.S. data falls into the camp of the U.S. monetary policy hawks, who want the Federal Reserve to keep their foot on the policy-tightening accelerator. "Wall Street still is pricing in one more rate hike at the February FOMC meeting, but if the U.S. data does not break, a March hike should start to get priced in," said Edward Moya of OANDA.

Global stoPICck markets were mixed overnight. U.S. stock indexes are pointed solidly lower at midday. Trading volumes are likely to wane on Friday, just ahead of the Christmas holiday over the weekend and as a massive winter storm pounds much of the U.S. and is heading for the east coast.

'This time is different' for uranium, which could reach $80 in 2023 – Lobo Tiggre

Rising Covid infections in China have the marketplace pensive late this week. Bloomberg reported China is experiencing 1 million new infections and 5,000 virus deaths each day, following the Chinese government's relaxation of Covid restrictions.

The key outside markets today see the U.S. dollar index higher. Nymex crude oil prices are near steady trading around $78.25 a barrel. Meantime, the yield on the benchmark U.S. 10-year Treasury note is presently 3.675%.

Technically, February gold futures bulls still have the overall near-term technical advantage. A six-week-old uptrend is in place on the daily bar chart. Bulls' next upside price objective is to produce a close above solid resistance at the December high of $1,850.00. Bears' next near-term downside price objective is pushing futures prices below solid technical support at $1,775.00. First resistance is seen at $1,820.00 and then at this week's high of $1,833.80. First support is seen at $1,800.00 and then at this week's low of $1,793.20. Wyckoff's Market Rating: 6.5

March silver futures saw some profit taking today after prices hit an eight-month-high on Wednesday. The silver bulls still have the firm overall near-term technical advantage. Prices are in a choppy 3.5-month-old uptrend on the daily bar chart. Silver bulls' next upside price objective is closing prices above solid technical resistance at $25.00. The next downside price objective for the bears is closing prices below solid support at the December low of $22.19. First resistance is seen at $24.00 and then at today's high of $24.215. Next support is seen at $23.50 and then at $23.00. Wyckoff's Market Rating: 7.0.

March N.Y. copper closed down 445 points at 376.55 cents today. Prices closed near the session low and scored a bearish outside day down today. The copper bulls and bears are on a level overall near-term technical playing field. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at the November high of 394.70 cents. The next downside price objective for the bears is closing prices below solid technical support at 354.70 cents. First resistance is seen at today's high of 384.90 cents and then at the December high of 392.90 cents. First support is seen at this week's low of 372.30 cents and then at 370.00 cents. Wyckoff's Market Rating: 5.0.

By Jim Wyckoff

For Kitco News

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Gold moves higher as the dollar falls on the news of a BOJ policy revision

The Bank of Japan's surprise decision that they would raise their benchmark interest rate cap from 0.25% to 0.50% sent ripples through the global financial markets. Since 2016 the Japanese Central Bank has set its target range for the yield of 10-year Japanese government bonds near zero, with a cap of 0.25%. As other major central banks began to enact interest rate hikes this year the BOJ maintained their cap on its benchmark rate near zero.

According to Reuters News, "The Bank of Japan shocked markets on Tuesday with a surprise tweak to its bond yield control that allows long-term interest rates to rise more, a move aimed at easing some of the costs of prolonged monetary stimulus…But the central bank kept its yield target unchanged and said it will sharply increase bond buying, a sign the move was a fine-tuning of existing ultra-loose monetary policy rather than a withdrawal of stimulus."

The move by the BOJ astounded financial markets globally. The value of the Japanese yen rose dramatically to a four-month high against the U.S. dollar which in turn resulted in strong gains across-the-board in the precious metals. Gold gained approximately 1.7%, silver gained 5.22%, palladium gained 3.79%, and platinum gained 2.53%.

As of 4:15 PM EST gold futures basis, the most active February 2023 contract is fixed at $1828.20 after factoring in a net gain of $30.50. Spot gold gained $31 and is currently fixed at $1818.40. Silver had the largest percentage gain of over 5% with the most active March 2023 futures contract gaining $1.20 and is fixed at $24.39.

Gains in the precious metals were partially driven by dollar weakness but the vast majority of today's moves were the result of strong buying in the markets.

Our technical studies indicate that the support levels for gold futures are first at $1795, which corresponds to the longest-term moving average used by market technicians. Followed by the 200-day MA, major support occurs just below the 200-day SMA at $1785 which is also based upon the 23.6% Fibonacci retracement. The Fibonacci retracement uses a data set that begins at $1619 the low hit two months ago and concludes at $1837, the highest value gold made since August.

By Gary Wagner

Contributing to kitco.com

Time to Buy Gold and Silver

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