Page 20 - Bullion World Volume 03 Issue 07 July 2022

Bullion World | Volume 5 | Issue 09 | September 2025

The investment surge and policy anchors: On the upside, renewed geopolitical tensions or a
The demand for gold resumption of accelerated central-bank buying could
The surge in gold prices during 2025 has been propel gold to fresh highs.
remarkable. In the first quarter, the average global spot
price stood at USD 2,860 per ounce, representing a 38 Demand for an industrial metal:
per cent year-on-year increase . This was followed by Silver price trends and outlook
another sharp escalation in the second quarter, with If gold’s rally was noteworthy, silver’s trajectory in
average prices climbing to US$3,280.35 per ounce, a 2025 has been even more striking. By June, silver
40 per cent annual increase and a 15 per cent quarter- prices had surged past USD 35 per ounce, a level
on-quarter rise . The forecasted average price for the not seen in more than a decade, representing an
final quarter of 2025 is around USD 3,600/oz, with approximate 24 per cent year-to-date increase . The
upside projections approaching USD 4,000/oz by mid- Silver Institute reports that the average price in 2024
2026 . The surging demand for financial investment was USD 28.27 per ounce, itself a 21 per cent rise on
and persistent central-bank purchases are expected to the previous year, but 2025 has already outstripped
drive demand soon. those gains . Prices are up around 25 per cent year-
to-date, benefiting both from investor inflows and from
Several factors underpin this momentum. Foremost a persistent structural deficit. The industrial demand
among them is sustained geopolitical uncertainty, of 680.5 million ounces in 2024 also projects another
amplified gold’s traditional role as a safe-haven deficit in 2025, the fourth consecutive year.
asset. The monetary environment also contributes
because, despite modest interest-rate adjustments in The gains in silver can be attributed to two major
the United States, real yields remained low, leaving forces. Firstly, silver benefited from the ‘safe-haven
little opportunity cost to hold non-yielding assets like halo effect’ generated by gold’s record run, and
gold. Central bank purchases, led by emerging market secondly, and probably more critical, was industrial
economies, add further pressure on supply. Analysts demand. Silver’s unique role in photovoltaic cells for
forecast gold prices to remain elevated through 2025, solar panels has created an industrial consumption
though volatility is expected to intensify. Since 2022, boom, with demand from the solar sector growing
official sector purchases have diversified away from by over 150 per cent between 2019 and 2023.
the U.S. dollar and boosted the legitimacy of gold as Emphasis on solar energy and, therefore, photovoltaic
a monetary anchor. While Q2 2025 purchases slowed applications remains the single largest growth segment
compared to the extraordinary levels of 2023-24, net for silver as solar panel capacity expands rapidly
additions remain robust. The persistence of central in China, Europe, and India. Japanese fabrication
bank buying, particularly from China and other Asian demand, particularly for electronics and power-
economies, provides a structural foundation for electronics components, has been highlighted as a
demand. At the same time, a softening jewellery sector durable source of silver consumption. As a result, the
suggests that consumer affordability constraints could balance of risks points to tightness in the physical
create downward adjustments. On balance, consensus market. Investors have increasingly viewed silver
projections place gold in the USD 3,000 to 3,300 per as a leveraged play on gold, with its dual industrial
ounce range by year-end, with potential upside should and monetary identity ensuring that dips attract both
geopolitical shocks deepen. The risks to this bullish industrial buyers and financial participants.
outlook are asymmetric. On the downside, a hawkish However, the silver demand surge coincided with
re-pricing of the U.S. Federal Reserve’s policy path, relatively flat mine output, resulting in four consecutive
or a faster-than-expected disinflation, could weaken years of supply deficits. Even though the mine supply
ETF flows and strengthen the dollar, pressuring prices. is forecast to rise modestly in 2025 by 1.9 per cent,

5. World Silver Survey 2025, The Silver Institute, https://silverinstitute.org/wp-content/uploads/2025/04/World_Silver_Survey-2025.pdf
6. Ibid
7. Lee, J. (2024). Why silver is having a golden moment. The Wall Street Journal, https://www.wsj.com/finance/commodities-futures/why-silver-is-having-
a-golden-moment-bf91bb17
8. World Silver Survey 2025
9. Ibid

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