Spot silver prices continue their strong performance, once approaching the $90 per ounce mark, driven by robust industrial demand, persistent supply chain tightness, and geopolitical risks. Analysts believe the current rally is no longer merely a case of silver following gold; its own industrial properties are becoming the key force driving its price trend, with a "perfect storm" for price increases brewing.
This week, the silver market has been eye-catching. Spot silver prices surged over 6% mid-week, hitting a near two-month high, and are currently hovering around $88 per ounce, continuing the recent recovery momentum. Compared to the same period last year, the silver price has soared approximately 163%, making it one of the best-performing assets in the commodities sector.
This round of rebound signals silver is gradually emerging from the shadow of its early-year plunge. In January, silver reached a historic peak of $121.64 per ounce, only to collapse sharply to around $60 by March. Now, with its slow but steady recovery, investors are pondering: is $88 a springboard towards triple-digit prices, or the starting point of another correction?
**Industrial Attributes Shine, Supply-Demand Deficit Provides Solid Support**
Analysts widely agree that the foundation of this rebound lies in strong fundamentals. Silver's industrial properties are increasingly overshadowing its role as a monetary asset. With robust demand from sectors like photovoltaic power generation, electric vehicles, medical technology, and semiconductors, industrial silver consumption now accounts for 55% to 60% of global silver demand.
More critically, the supply side continues to face pressure. Ongoing conflicts in the Middle East are impacting the global sulfur supply chain, and sulfuric acid is a key raw material for base metal production. This has led to reduced output of metals like zinc, copper, and lead. Silver is often a by-product of these metals, so its production has also declined. Analysts project the silver market will face its sixth consecutive annual supply deficit this year, with a shortfall of approximately 67 million ounces, which should build a solid floor for prices.
Julia Khandoshko, CEO of European broker Mind Money, notes that the energy crisis triggered by conflict in Iran will spur greater demand for alternative energy, and silver is a critical metal for renewables and new electric vehicles. She states, "The drivers for silver are no longer just investor sentiment; supply constraints, logistics disruptions, and green energy demand are reshaping the market landscape."
**$90 as Key Resistance; Breakthrough Could Target Historical Highs**
For near-term direction, analysts are focused on the key resistance level of $90 per ounce. Elior Manier, a market analyst at OANDA, points out that while silver typically follows gold's lead, this strong rebound indicates genuine demand and heavy buying interest focused on alternative metals. He believes that in the current environment, silver has room to test the $90 resistance.
Peter Cardillo of Spartan Capital Securities suggests silver could soon challenge the $100 mark. He states, "The rally in AI-related stocks and silver's increasingly widespread application in that field are important reasons investors may continue pushing silver prices higher." He adds that the recovery of Chinese demand remains a key factor supporting silver and other base metals.
From a technical chart perspective, David Morrison, Senior Market Analyst at Trade Nation, notes that the daily MACD indicator has turned sharply upward, indicating strengthening bullish momentum. He points out that if the price can break above $90, traders and investors might begin targeting the record high of around $120 per ounce set in January this year.
**Macro Headwinds Persist, Potential for Short-Term Tug-of-War**
However, silver's upward path is not without obstacles, as macro-level headwinds remain strong. The market is currently pulled by two forces: on one side, safe-haven buying spurred by geopolitical risks, with the continued blockade of the Strait of Hormuz supporting oil and precious metals; on the other, pressure from hawkish Federal Reserve expectations.
The U.S. Consumer Price Index (CPI) for April climbed to 3.8%, the highest since May 2023, while core inflation rose to 2.8%, exceeding expectations. This makes near-term interest rate cuts increasingly unlikely. Futures traders have now pushed the probability of a Fed rate hike by April 2027 above 70%. Higher real interest rates and a strong dollar increase the opportunity cost of holding non-yielding metals. If subsequent economic data surpasses expectations again, silver prices could see a short-term correction, testing support around $80.
Commodity analysts at TD Securities emphasize monitoring demand signals from the East. They note that top traders on the Shanghai Futures Exchange have been consistent buyers of silver over the past month, with strong premiums in the Chinese market, which could act as a catalyst for further price increases.
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