Key Takeaways

• Precious metal prices have pushed higher in recent weeks amid growing expectations of U.S. interest rate cuts.
• Marcus Garvey, head of commodities strategy at Macquarie, said on Friday that near-term U.S. jobs and inflation data could determine whether gold prices push as high as $2,300 or drop back to around $2,100.
• “If we start to see global growth pick up a bit more over the course of this year — which is very much our base case — then I would expect silver to go from a relative under-performer to gold to being a relative out-performer to gold over really the third and fourth quarter of this year,” Garvey said.

A record-breaking rally for gold may yet continue, particularly as investors position for interest rate cuts — but analysts say silver appears well placed to outshine the yellow metal in the second half of the year.

In recent weeks, precious metal prices have been on an upward trajectory, fueled by mounting expectations of U.S. interest rate cuts. This surge has seen gold prices flirting with record-breaking highs, prompting investors to ponder whether the rally will persist. Marcus Garvey, head of commodities strategy at Macquarie, believes that near-term U.S. jobs and inflation data will be critical in determining whether gold prices soar to $2,300 or retreat to around $2,100.

Despite the current dominance of gold, Garvey suggests that silver is poised to emerge as the star performer in the latter half of the year. He anticipates a shift in silver's fortunes, projecting it to outshine gold during the third and fourth quarters. This forecast hinges on the expectation of global economic growth gaining momentum, which would elevate silver from its current status as a relative under-performer to a shining beacon in the precious metals market.

Currently, gold prices hover around $2,178 per ounce, while silver sits at $24.36 per ounce. These figures underscore the resilience of precious metals amidst economic uncertainty. Even with high interest rates and a robust U.S. dollar, gold continues to rally—a testament to its status as a safe haven asset.

Garvey emphasizes the importance of understanding the underlying factors driving gold's movements. While often perceived as a defensive asset, gold's performance oscillates between risk-on and risk-off sentiments. Crucially, expectations of imminent rate cuts by the Federal Reserve are bolstering gold's appeal, a factor that could propel prices even higher.

A ‘great year’ ahead for silver?

For silver, Garvey identifies a critical threshold of $24 per ounce. Crossing this mark convincingly could pave the way for sustained upward momentum, whereas lingering just above it leaves room for potential corrections. However, with silver's dual role as both a precious and industrial metal, its fate is intricately tied to global economic dynamics. Should global growth accelerate, as Garvey anticipates, silver is primed to shine brightly.

Traditionally considered the "poorer cousin" of gold, silver's fortunes often mirror those of its illustrious counterpart with a delay. Randy Smallwood, CEO of Wheaton Precious Metals, points out that silver tends to follow gold's lead, albeit at a later stage. As gold surges, silver swiftly follows suit, ultimately outperforming its predecessor.

“Gold will shoot up first and then you will see silver take off rapidly. And silver always outperforms. It’s just late.”

Looking ahead, the Silver Institute forecasts robust demand for silver, particularly driven by industrial applications such as automobile manufacturing, solar panels, jewelry, and electronics. This projection aligns with Garvey's expectation of silver's ascendance in the precious metals hierarchy.

In conclusion, while gold may continue to dazzle investors in the short term, all eyes are on silver as it prepares to steal the show. As economic landscapes evolve and global growth gains momentum, silver's dual role as a precious and industrial metal positions it for a spectacular performance in the coming quarters. Investors would be wise to keep a close watch on silver as it emerges as the dark horse in the precious metals race.

Interested in learning how to buy gold and buy silver?

Call 1-800-300-(GOLD) and speak with a Precious Metals Specialist today!

or