Investing.com – prices may see headwinds in the near term due to widespread economic uncertainty, although the metal has received support from global-excess global supply, according to analysts at Bank of America.
A strong US dollar and weak industrial activity have put pressure on silver recently, while President-elect Donald Trump's plans to impose tough import tariffs on Canada and Mexico – the main suppliers of steel to the US – have threatened to derail silver markets, analysts said in a note to clients.
However, the price of silver has hovered around $30 per ounce for the past nine months. At 04:02 ET (09:02 GMT) on Thursday, silver was trading up 0.5% at $30.81.
BofA analysts led by Michael Widmer said that, in their opinion, this strengthening has been linked to “the failure of the relative silver markets”, and “the limited growth of mining production (…) the main source of price support” in particular.
Global silver consumption exceeded metal production in 2022 and 2023, and is expected to do so again in 2024, research from BofA found.
They estimate that 37,083 tonnes of silver will be sold this year, down 0.4% from the amount forecast for 2024, while output is seen to increase by 3.5% to 33,021 tonnes. Without changes, the silver market will remain in deficit – a trend BofA analysts expect to continue until 2026.
“(T)he silver market has been in deficit for a while now and those deficits have finally been accounted for,” the analysts wrote. They noted that this support has been reflected in other regions, with silver “selling at a premium” in India and Chinese buyers having to “pay up to the source ounces.”
As a result, analysts say silver has “solid fundamentals”, adding that it is “more positive” than steel.
“Silver will not lose its luster for long,” they said.