Silver prices have surged to their highest levels in over a decade, reaching $32.71 per ounce, driven by a combination of strong demand and China’s recent stimulus measures. The metal has gained more than 35% in 2024, outperforming other precious metals as it benefits from its dual role as both an investment asset linked to gold and an industrial metal.
China’s central bank has introduced its largest stimulus since the COVID-19 pandemic, which includes anticipated cuts to interest rates. This move is expected to boost industrial metals, with analysts like Ole Hansen from Saxo Bank predicting that silver could continue to outperform gold, potentially driving the gold-silver ratio down to the 70-75 range.
Citi analyst Max Layton forecasts silver prices could rise to $35 in the next three months and reach $38 within 6-12 months, citing interest rate cuts as a bullish factor for global economic activity and silver consumption.
However, concerns remain regarding the sustainability of this rally. Analysts warn that slowing industrial output growth in China, which hit a five-month low in August, and potential consolidation in the solar industry could hinder silver demand. Hamad Hussain from Capital Economics cautions that the recent support measures may not significantly revive growth, and traders might be overestimating the likelihood of further interest rate cuts by the U.S. Federal Reserve.
Overall, while silver’s current momentum is strong, its future performance appears closely tied to gold and broader economic conditions, particularly in China.