As traders assess the potential impact of U.S. trade policies on precious metals, silver prices are projected to rise significantly in 2025, with some analysts forecasting that silver could hit $40 per ounce. This comes amid concerns about a possible U.S. recession and the growing demand for silver in industries such as solar energy and artificial intelligence.
Market Dynamics and Volatility
On Wednesday, the price of NYMEX gold futures surged by 2%, reaching $60 above the London spot price, while silver futures also rose by 3%, with a premium exceeding $1. Market observers believe these sharp price movements reflect a sense of panic, driven by traders engaged in arbitrage between the New York and London markets. This volatility, fueled by actions from major banks and funds, has been exacerbated by market uncertainty surrounding U.S. tariff policies.
Silver Expected to Shine in 2025
Analysts at Heraeus Precious Metals predict that despite the potential for a U.S. recession in the second quarter of 2025, silver is expected to outperform gold in the coming year. Their forecast suggests that silver prices will continue their strong momentum into 2025, after rising 26.82% through November 2024. Historically, silver tends to outperform gold in the later stages of a bull market. If this trend continues, the gold-to-silver ratio could return to its long-term average of 67, pushing silver prices up to $40 per ounce.
Recession Risks and Silver Demand
While a possible U.S. recession could dampen industrial demand for silver, the analysts at Heraeus highlight that certain sectors, particularly solar energy, are expected to continue driving strong demand for the metal. Silver has significant use in solar photovoltaic (PV) technologies, and as global solar installations expand, demand for silver is likely to rise. Countries beyond China are increasingly investing in gigawatt-scale solar capacity, further boosting silver consumption.
Heraeus analysts also note that silver’s industrial demand could remain resilient due to its unique role in electronics and solar energy. In particular, silver’s conductivity makes it an essential component in microchips, which are key to the growth of artificial intelligence (AI) technologies. As AI accelerates, the demand for microchips and data storage solutions is expected to surge, pushing up silver consumption.
The Role of AI in Silver Demand
The rise of AI is anticipated to be a major factor driving silver demand. With the rapid expansion of data generation and storage, the need for energy storage in data centers will increase, which in turn will elevate the demand for silver. Global data usage is expected to grow by 50% by 2025 compared to the period from 2010 to 2016, with AI serving as the central driver of this growth.
Silver’s Role in U.S. Economic Recovery
Heraeus analysts also point to the potential role of silver in the U.S. economic recovery following a possible recession. Historically, infrastructure investment has been a key tool for stimulating economic growth after a downturn. Silver is crucial in the development of renewable energy infrastructure, including electric vehicle charging stations and solar power facilities. These sectors are expected to see significant growth in the coming years, further supporting demand for silver.
Price Outlook for 2025
Looking ahead, Heraeus analysts predict that silver prices will fluctuate between $28 and $40 per ounce in 2025. While economic uncertainty and recession risks remain, the strong demand from the solar and AI sectors is expected to propel silver prices upward.
In conclusion, despite the looming recession, analysts are optimistic that silver will continue its upward trajectory in 2025, driven by both industrial demand and emerging technologies.
