Where Will Silver and Gold Prices Be Next Year?

[Ben Graham]

Last week, gold began to correct from its historical highs. In the short term, further price declines are possible. Nevertheless, this decrease has not undermined long-term enthusiasm.

At the annual World Gold Conference of the London Bullion Market Association, participants predicted that by this time next year, gold may test a resistance level just below $5,000 per ounce, which is 25% higher than current prices. This is the most positive forecast from LBMA participants in recent years, during which they have underestimated the rise in the price of the precious metal.

Major financial institutions, such as HSBC and Bank of America, share a similar view: they expect gold to reach $5,000 per ounce by 2026. The British research firm Metals Focus also forecasts that next year, gold will rise to $5,000, while silver will increase to $60. Despite a slight decrease, analysts emphasize that gold continues to enjoy good demand due to global geopolitical tensions and expectations of monetary policy easing from the Federal Reserve, which will weaken the American dollar.

Not everyone shares this complete optimism. The World Bank anticipates a 5% price increase in gold next year, while the French corporate investment bank Natixis predicts an average price of around $3,800 per ounce in 2026. However, even these cautious estimates cannot be considered negative. The World Bank report states that despite expected price declines, prices in 2026 will remain more than 180% above the average level for 2015-2019.

It is difficult to remain pessimistic when central banks continue to build their gold reserves for diversification purposes. The World Gold Council reported that in the third quarter, central banks purchased approximately 200 tons of the precious metal and plan to buy an additional 750 to 900 tons this year.

Even after accumulating over 3,000 tons in the last three years, interest remains high. At the LBMA conference, the representative of the South Korean central bank, Hyun-Sung Jeon, noted that, for the first time since 2013, the bank is considering additional gold purchases in the medium- and long-term.

Currently, prices are likely to consolidate, but many analysts see opportunities to strengthen positions ahead of the next significant rise in gold.

The material has been provided by InstaForex Company - www.instaforex.com