Silver prices are on the rise, driven by a projected supply shortage and shifting flows to U.S. exchanges. While trade wars and energy policy uncertainty remain, silver's fundamental strength and technical outlook suggest further gains are possible.
Silver prices have surged this year, fueled by uncertainty surrounding U.S. trade policies. While tariffs and geopolitical tensions have driven recent gains, fundamental factors suggest the rally has room to run. The Silver Institute projects another year of supply shortages in 2025, despite a potential U.S. energy policy shift favoring fossil fuels. Meanwhile, metals markets remain highly sensitive to global events.
From a technical perspective, silver is testing a key supply zone near $33 per ounce. A breakout above this level could clear the path for a retest of long-term highs.Global silver production has struggled to recover since peaking at over 900 million ounces in 2016. Output fell to an estimated 832.5 million ounces last year but is expected to rebound slightly to 844 million ounces in 2024. Including recycling, total supply could hit an 11-year high of 1.05 billion ounces. However, a projected deficit of around 250 million ounces remains a concern. If inventory drawdowns accelerate in the second half of the year, silver prices could face additional upward pressure. Production stability in key mining regions—Mexico, Chile, and Peru—will be a crucial factor. Any disruptions could tighten supply further, amplifying silver’s bullish outlook.The shift in U.S. energy policy and ongoing trade disputes could impact silver demand. If the U.S. moves decisively toward fossil fuels and tariffs slow global growth, demand from key sectors such as photovoltaics and electric vehicles could weaken. However, any supply shocks or renewed industrial demand could offset these risks.An unusual movement of physical silver has emerged in recent months, with large inflows shifting from London and Asia to U.S. exchanges. This trend follows the implementation of a tariff-free storage regime, reducing risks for metals held in New York and Chicago. Additionally, the imposition of 10% tariffs on Chinese goods, alongside Beijing’s retaliation, could reinforce the shift in trade flows. If this pattern continues, it could impact liquidity and pricing dynamics in the silver market.After bottoming near $29 per ounce at the start of the year, silver has gained momentum, approaching a key resistance level at $33 per ounce. A decisive breakout could propel prices toward $34.60, with a potential move to long-term highs near $35 per ounce.
SILVER PRICE DEMAND SUPPLY TRADE ENERGY POLICY TECHNICAL ANALYSIS MARKET TRENDS
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