The price of silver, denominated in Indian Rupees (INR), has experienced a significant increase of 15% during the calendar year 2024.
This upward trend has continued into 2025, with a further 11% rise in prices year-to-date.
This surge in silver prices can be attributed to a confluence of multiple factors.
The decline in US interest rates has played a crucial role, as lower interest rates tend to make precious metals like silver more attractive to investors, Emkay Wealth Management said in a note.
Additionally, the prevailing geopolitical tensions and uncertainties surrounding the policies of the Trump administration have contributed to the demand for safe-haven assets, including silver.
Looking ahead, the outlook for silver prices appears positive, Emkay said.
The combination of ongoing economic uncertainties, potential for further geopolitical instability, and the continued accommodative monetary policies by central banks around the world are likely to provide sustained support to silver prices.
Investors seeking a hedge against inflation and currency devaluation may continue to allocate funds towards silver, further bolstering its price.
Silver prices: fundamental factors
Emkay said:
The medium term as well as long term factors indicate a positive outlook for silver.
The demand for precious metals is significantly influenced by interest rates in the near to medium term. US interest rates are projected to gradually decline in 2025.
The current geopolitical climate is characterised by volatility and unpredictability, and this state of affairs is expected to persist in the foreseeable future.
The trade policies implemented by the Trump administration, with their emphasis on protectionism and unilateralism, are likely to exacerbate this uncertainty.
This is likely to drive investors towards safe-haven assets such as gold, US Treasury bonds, and the Swiss franc.
These policies could also trigger a global trade war, which would further disrupt supply chains, dampen business confidence, and slow economic growth.
Additionally, rising tensions between major powers, ongoing conflicts in various regions, and the threat of terrorism all contribute to the prevailing sense of geopolitical risk.
These factors are likely to continue to weigh on investor sentiment and shape market trends in the coming months and years.
Long term outlook for silver prices
“The long term outlook of a commodity is determined by the demand-supply scenario,” Emkay said.
The global silver market has been experiencing a supply deficit for the past four years, and this trend is projected to continue into the foreseeable future.
Current estimates for the calendar year 2024 indicate that the total silver supply will reach approximately 1,004 million ounces.
Source: Silver Institute
However, the anticipated demand for silver during the same period is considerably higher, estimated to be around 1,219 million ounces.
This substantial gap between supply and demand highlights a significant imbalance in the silver market, which could have implications for the price and availability of silver in the coming years.
Industrial applications, such as electronics, circuit boards, solar panels, and electric vehicle batteries, account for roughly 60% of the demand for silver.
“As the adoption of EVs and green energy technologies continues to gain traction, the industrial demand for silver is expected to remain robust,” Emkay said.
Silver prices: technical factors
“Silver is showing signs of relatively higher momentum with the price trying to breach the crucial US$ 33 level,” the firm added.
Given silver’s diverse industrial applications, its price is projected to rise from its current level, reaching $36.60, $38.70, and $39.30 on COMEX, it said.
“Investing in silver funds with a 12 to 18 months’ time horizon is likely to be a worthy proposition.”
The second technical factor of importance is the gold-silver ratio, according to Emkay.
Source: Emkay
The gold-silver ratio is currently around 90, which suggests that silver is currently undervalued.
“If the ratio is to go back to its long term range of 50 to 70, it translates into strengthening silver prices over the medium term.”
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