Silver prices rise amid high demand and limited supply

Silver prices rise amid high demand and limited supply

Silver prices have seen a significant increase in recent weeks, driven by a combination of high demand and limited supply. The precious metal, often used as a safe-haven asset, has been gaining traction due to renewed trade concerns and a weaker U.S. dollar. According to FXStreet, silver prices (XAG/USD) have halted their three-day losing streak, trading around $36.50 per troy ounce during the Asian hours on Thursday, July 2, 2025 [1].

The demand for silver has surged due to the renewed trade concerns, with U.S. President Donald Trump's new letters detailing individual tariff rates ranging from 20% to 50% on eight countries, taking effect starting August 1 [1]. Additionally, Trump has announced a new 50% tariff on U.S. copper imports, which will also take effect on August 1 [1]. These tariffs have sparked concerns about a renewed global trade war, leading investors to seek safe-haven assets like silver.

The U.S. dollar's weakening has also supported silver prices. The U.S. Dollar Index (DXY) has extended its losses for the second successive session, trading at around 97.40 as of July 2, 2025 [1]. A weaker dollar makes silver more affordable for buyers using foreign currencies, contributing to its price appreciation.

The Federal Open Market Committee (FOMC) Minutes from the June 17–18 meeting indicated that policymakers largely maintained a wait-and-see stance regarding future interest rate decisions [1]. The minutes suggested that Fed officials were divided on the timing and extent of potential interest rate cuts, with most policymakers expecting some easing later this year.

Industrial demand for silver has also been a significant factor in its price increase. Silver is widely used in industries such as electronics and solar energy due to its high electric conductivity. The demand for silver in these sectors has reached record levels, outpacing mining production [2].

Institutional interest in silver has also been on the rise. Large generalist funds that previously ignored silver are now actively seeking exposure to the metal. This increased institutional interest, combined with the limited market size of silver (approximately $30 billion), has the potential to significantly impact silver prices [2].

Industry experts project that silver may reach $40-41 per ounce by the end of 2025, representing a significant milestone for the metal [2]. Some analysts believe that silver may be in the early stages of a multi-year bull cycle, with triple-digit prices eventually becoming necessary to incentivize the development of lower-grade deposits [2].

In conclusion, silver prices have been rising due to high demand and limited supply, driven by renewed trade concerns, a weaker U.S. dollar, and increased institutional interest. As industrial demand continues to grow and supply constraints persist, silver prices are expected to remain strong in the coming months.

References:
[1] https://www.fxstreet.com/news/silver-price-forecast-xag-usd-edges-higher-to-near-3700-due-to-safe-haven-demand-202507100400
[2] https://discoveryalert.com.au/news/silver-prices-2025-supply-demand-institutional-interest/