Silver prices surge 11% YTD; outlook remains positive amid strong demand

Emkay Wealth Management said that the medium-term as well as long-term factors for silver indicate a positive outlook, according to a media release issued on Thursday. Prices of silver in INR terms, have moved up by 15% in CY24 and YTD 2025 the prices are up by another 11%.

A confluence of factors such as falling US interest rates, geopolitical situation and uncertainties surrounding Trump policies have been supportive of precious metals. Going ahead silver prices are expected to be well supported.

The release said the US interest rates are expected to follow a downward trajectory for 2025, albeit at a gradual pace. Over the near to medium term interest rates are a critical determinant of demand for precious metals. The geopolitical situation is expected to remain fluid over the near term and the trade policies of the Trump administration are expected to encourage safe-haven demand.

The long-term outlook of a commodity is determined by the demand-supply scenario. The supply of silver has been in deficit over the last four years. The supply for CY24 is estimated at 1,004 million ounces whereas demand is estimated at 1,219 million ounces. The majority of this demand (60%) comes from industrial uses. Silver finds extensive applications in electronic devices, circuit boards, solar panels and electric vehicle batteries.

As the adoption of EVs and green energy technologies continues to gain traction, the industrial demand for silver is expected to remain robust.

Silver is showing signs of relatively higher momentum with the price trying to breach the crucial US$ 33 level. With a variety of industrial uses silver is expected to have a better run moving higher from the current level to US$ 36.60, US$ 38.70, and US$ 39.30.Investing in silver funds with a 12 to 18-month time horizon is likely to be a worthy proposition. The second technical factor of import is the gold-silver ratio. At current prices, the gold-silver ratio is hovering around the 90 mark, indicating a relative cheapness in silver prices. 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.