Green energy, automobiles and electronics drive global demand
Global industrial demand for silver is expected to increase by 7% in 2024, topping 700 million ounces for the first time. The sector is heavily dependent on silver, so renewable energy efforts, particularly solar power, are a major driver.
Demand for silver in electronics and auto manufacturing also remains strong, supporting overall consumption. Additionally, demand for silver jewelery and silver products is expected to increase by 5% due to increased imports into India due to lower import duties.
Physical investment decreases, but ETP inflow increases
Despite strong industrial demand, investment in physical silver is expected to fall 15% this year, hitting a four-year low. Decreasing economic concerns are suppressing retail demand for silver coins and bars.
But flows into exchange-traded products (ETPs) are strong, as expectations for Fed rate cuts and the potential for a weaker dollar make silver an attractive hedge.
Strong dollar and Chinese stimulus impact silver outlook
A stronger US dollar supported by expected fiscal policy is a headwind for silver. A rising dollar could push up the price of silver in other currencies, limiting demand.
Upcoming U.S. inflation data, with the consumer price index expected to rise 2.6% year-on-year, could shape future Federal Reserve policy. Analysts expect further interest rate hikes to curb inflation could push up the dollar and weigh on silver prices.
