Geopolitical tensions propel silver demand to new heights amid supply challenges

In a recent report by Motilal Oswal Financial Services Ltd, the impact of geopolitical tensions on precious metals, particularly silver, has come into sharp focus.

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The Silver Institute’s forecast indicates that silver demand is expected to grow by about 2 per cent from 2023 to 2024, reaching around 1,219 tonnes.

Industrial demand is projected to hit a record high of 710.9 tonnes, driven by an 8.5 per cent increase compared to 2023 and a remarkable 40 per cent rise since the pandemic.

Meanwhile, demand for jewellery and silverware is expected to increase by 4.5 per cent, although net physical and photographic demand is anticipated to decline.

On the supply side, total silver supply is expected to decrease by about 1 per cent, aligning with levels observed in 2021. Mine production is projected to fall to 823.5 tonnes, attributed to ongoing operational challenges that hinder output.

The high prices in domestic markets have made recycling less attractive, further constraining supply. As a result, demand for silver is anticipated to outstrip supply for the fourth consecutive year, creating a persistent market deficit that could drive prices upward.