Silver prices will most likely remain bound to the upper $15s per troy ounce in the coming months, but will climb to the upper $16s in the autumn, Philip Newman of UK research company Metals Focus said as reported by Platts.
Silver futures for July delivery had dipped 0.03 percent to $15.960 per troy ounce as of 09:27 BST today. The contract has declined almost 10 percent on a monthly basis.
"In Q4, we expect silver to rise,” Newman said at the International Precious Metals Institute meeting in San Antonio on Sunday. "One of the reasons is that seasonally, this is a strong time for gold in India and China, and that should help silver as well."
Silver demand in India rose to record levels last year, Newman said, and for the first five months of 2015 is up 20 percent on an annual basis.
Still, surging demand from India will not be sufficient to push silver high enough to pare recent weakness. Newman estimated that average silver prices for 2015 will be 15 percent lower than last year, though a 10 percent rise is expected next year.
Noting that silver is unable to break away from gold, Newman said that the stronger forces that will drive precious metals prices in the coming months are the dollar and US interest rates.
With the Federal Open Market Committee (FOMC) concluding its two-day monetary policy meeting today, all eyes are on the forthcoming statement and presentation.
The Fed will almost certainly keep the base interest rate unchanged at 0.25 percent, but is expected to give some indication as to when borrowing costs will be increased.
Fed chair Janet Yellen has explicitly said that a rate hike is most likely to happen before the end of the year, while analysts predict it will occur following the FOMC September meeting.
Newman argued that the rate increase will most likely be gradual and predictable, which will be “very good” for precious metals come 2016.
Newman’s comments came in line with the views of Adam Koos, president of Libertas Wealth Management Group, who argued last week that Silver prices will endure a prolonged downside trend through to late 2015.
“You should not invest in silver now if you like making money and doing so safely,” Koos said as quoted by MarketWatch.com. “There is entirely too much headwind and uncertainty concerning the US dollar, not to mention a 100 percent chance that interest rates will rise.”
“Take a little hiatus until 2016…when the US president will be a huge question mark, US stocks will most likely pick up in volatility and any rate increases will have already been priced into the metals.”