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Global silver demand forecasted to rise to 1.2 bn ozs in 2024: Silver Institute

Silver Institute in its latest report stated global silver demand is forecast to reach 1.2 billion ounces in 2024, which, if achieved would be the second-highest level recorded. Stronger industrial offtake is a principal catalyst for the rising global demand for the white metal, and the sector should hit a new annual high this year.

Global silver demand is expected to rise 1 percent, pushed higher by the continued strength of industrial end-uses and a recovery in Jewellery and silverware demand.

Jewellery demand is expected to record a 6 percent rise, and India will contribute the bulk of gains this year. This follows a sharp pull back in 2022 when Indian demand weakened after a post-COVID surge in 2021. On top of a return to more “normal” levels, a positive economic backdrop and consumers getting used to high rupee silver prices should also underpin growth this year. In the U.S. and Europe, soft consumer sentiment may continue to weigh on Jewellery consumption, but retailers’ stock replenishment will likely mitigate the impact on fabrication. In line with the jewellery sector, as demand normalizes, a recovery in India will lift global silverware fabrication by 9 percent.

By contrast, silver physical investment is projected to decrease by 6 percent to a four-year low, with losses dominated by the U.S. Solid economic growth and further gains in the U.S. stock market will be key drivers behind this weaker investor interest across all precious metal coins and bars. In India and Europe, a modest recovery is expected this year, compared with a depressed 2023 total. In the former, as Indian investors become accustomed to high rupee prices, bargain hunting is expected on price dips. Even with a recovery, Europe’s total volumes will remain near multi-year lows.

Total global silver supply is forecast to grow by 3 percent in 2024 to an eight-year high of 1.02 billion ounces, entirely led by a recovery in mine output.

Early 2024 has seen financial markets scale back their expectations of U.S. rate cuts, with many investors having believed this would start as soon as March. The consequential boost to the U.S. dollar and yields has created fresh headwinds to precious metal investment.

Even so, market expectations of U.S. interest rate cuts are still a little more dovish compared with the Fed’s more hawkish position. In the coming months, as the market gradually adopts a more hawkish stance, this will weigh on gold and silver investment. During this time, investor interest in silver could also be hampered by a still lacklustre recovery in China.

Nonetheless, this weaker investment is likely to be temporary, and silver’s positive fundamentals should encourage decent bargain hunting. Once the Fed starts to cut rates, most likely in mid-2024, silver investment should begin to recover.

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