Citi: Gold and Silver Still Have Upside Potential; Geopolitical and Macro Improvements Will Restore Precious Metals Investment Demand

August 12th, Citigroup Research stated that it believes the uptrend in precious metals is not over yet, and silver will continue to follow gold's direction. Due to its higher volatility and more aggressive upward movement, silver will become a more expressive asset. If the situation in the Strait of Hormuz eventually stabilizes and the Fed's stance is no longer as hawkish, the investment demand for precious metals will continue to recover.

The recent market trends have provided background for this assessment. COMEX August gold futures settled up 0.49% at $4,383 per ounce. Silver futures fell 0.5% to $64.769 per ounce on the same day, ending a two-day rally. Citigroup believes that the short-term pullback does not change silver's position as a high-beta asset to gold. If geopolitical risks ease and drive funds back into precious metals, silver will have the opportunity to rise to $95 per ounce by 2027.

However, Citigroup also maintains a risk scenario. The bank believes that there is still about a 20% probability that silver will fall to $50 per ounce, indicating that current precious metal trading still heavily depends on interest rate expectations, the US dollar trend, and geopolitical risks. For the market, gold remains the core asset for defense and rate cut expectations, while silver is more suitable for expressing a resilient uptrend after a risk appetite recovery.