Silver price forecast for 2023 and beyond: Will the precious metal hang on to its recent gains?
The price of silver has had a solid year so far. After dropping below the psychological threshold of $19 per troy ounce to trade below $18 in late September 2022, silver began 2023 at $24 and has since risen over 5%.
Though the precious metal suffered a dip in March, falling to $20 it has gone up by 18% in the past month and as of 13 April was trading at $25 per troy ounce.
Silver price chart
Precious metals markets have been aided by a weakening US dollar, with the US Dollar Index (DXY) declining by 2.5% year to date (YTD) and over 10% in the past six months to 100.88 at the time of writing. Silver underperformed gold throughout 2022, and has continued to do so this year in spite of its upturn.
What are the factors affecting the silver market and where should investors expect the market to move next? In this article, we look at some of the latest silver predictions from analysts.
Silver price history: Macro volatility is key
The silver markets have climbed from the $12 per ounce lows reached at the start of the Covid-19 pandemic, as investors have bought physical precious metals and financial instruments as safe-haven assets during ongoing economic uncertainty.
The silver price reached a $28 high in August 2020 and ended the year around the $22 mark.
The price then jumped to an eight-year high in February 2021, briefly touching the $30 per ounce psychological level, as the market attracted the attention of retail investors.
Silver 5-Year Price Chart
Past performance is not an indicator of future results.
Rising industrial use
In addition to investor sentiment, the silver price trend has found support from its growing use in industrial settings, which account for roughly half the metal’s annual demand.
Physical silver demand climbed to a record high in 2021, led by an all-time high in industrial applications – silver is the best conductor of electricity, so it is often used in high-end applications. Consumption rose by 9% to 508.2 million ounces, according to the Silver Institute.
There were several trends driving up silver demand, including strong consumer electronics demand amid the transition to remote working, investment in 5G infrastructure and rising silver use in the green economy – especially in solar photovoltaic (PV) panels. Physical demand is expected to rise by 5% to another record in 2022.
Sales of silver coins and bars for investment jumped by 36% to 278.7 million ounces, the highest level since 2015, “as retail investors in North America and Europe, motivated by safe-haven and inflationary concerns, took advantage of periodically lower silver prices to purchase coins and bars,” said the Silver Institute.
The market saw its first deficit since 2015, with a shortage of 51.8 million ounces – the biggest shortage since 2010.
High inflation rates around the world were expected to support investment demand in 2022, as precious metals typically retain their value at times when rising prices erode the purchasing power of fiat currencies.
Rebounding spot price
The silver spot price fell from $24 to $23 per ounce at the start of the 2022, as central banks combatted inflation by rapidly raising interest rates. Higher interest rates tend to be bearish for precious metals, as investors opt for interest-bearing savings accounts and other assets that generate guaranteed returns.
Silver traded up from $22.30 per ounce in late January to $26.90 per ounce in early March, a peak so far this year, as the market responded to the Russian invasion of Ukraine. But while the market traded between $24 to $26 until mid-April, it began to sell off sharply later in the month as the dollar strengthened.
The DXY reached 105.52 on 14 June – its highest level since December 2002 – which saw the silver trading price drop to $20.936 per ounce.
The price bounced back to $21.867 in the following two days but then went on the decline, closely following the trajectory of the gold price.
The metal attempted to rebound in late July 2022, trading above the $20 mark for several weeks, before shedding close to $2 from its value in 10 days on the back of further interest rate hike expectations – in the current climate, the Fed’s pledge to curb inflation is leading investors to favour the dollar instead of non-interest-bearing bullion assets.
November saw the Fed make its fourth consecutive 75bps rate hike, taking its short-term borrowing rate to a target range of 3.75%-4% – the highest level since January 2008 – as it continues on its mission to return the US economy to 2% inflation.
The precious metal saw an outstanding few weeks towards the end of 2022, with a weekly gain of about 4.7% and a monthly gain of about 14.4%. This was largely been due to speculation about China loosening its current zero-Covid policy, even though official statements have denied this so far.
The continuous futures contract for silver ended last year at $23.97 per ounce.
So, what is the potential for the price of silver in the future? Below, we look at some of the analysts’ latest projections.
Analyst outlook: What’s next for silver?
Analysts remain cautious on the silver outlook, with the price having broken the key $20 per ounce level and interest rates rising.
German-based firm Heraeus forecast for 2023 predicted that market tightness will ease later in the year, stating that silver demand is likely to increase following an uptick in polysilicon production – a key component of photovoltaic cells used for harvesting solar energy – which could support the metal’s price.
“In silver, a moderate increase in demand for smartphones should support the price. For 2023, the Heraeus experts expect more sales of 5G-capable devices - this should boost silver demand. In addition, demand for photovoltaics should continue to rise in 2023. The Heraeus experts are skeptical about palladium. The market should show a surplus next year. Iridium should have bottomed out. Demand should rise slightly in 2023 due to the increasing use of PEM electrolysers in the hydrogen industry. This trend should strengthen in the following years.
The rise in silver demand from the solar PV sector could receive a boost over the coming years that could support the silver value in the future.
In May, the European Commission president announced a mandate for rooftop solar panels to be installed on public and commercial buildings in the next five years. The aim is to boost the target for European Union solar capacity by 10% over base-case projections.
“The aim of the mandate is to help the region fulfil its new ambition to become independent of Russian fossil fuels as soon as possible. It could also boost silver requirements for fabrication of photovoltaic (PV) panels, which are primarily imported from China,” analysts at Heraeus Precious Metals noted in their May appraisal.
“Global PV demand (127 million ounces) is forecast to be 12% of total silver demand in 2022. Despite metal thrifting, which has already reduced silver content in PV cells by 80% in the last decade, demand is set to grow over the next five years. After falling below a support level at $22 per ounce, silver has followed gold higher but could not return to that level.”
Demand for silver in the manufacture of electric vehicles is also set to rise to 70 million ounces in 2030, up from roughly 45 million ounces in 2017, according to the Silver Institute.
Capital.com reporter Indrabati Lahiri gave her opinion on the factors that could drive silver’s price in an analysis on 4 January:
“Silver’s outlook in the coming few months depends heavily upon how China handles the number of rising COVID-19 cases. If it chooses to reinstate mass lockdowns, silver could once again see losses as revenues from in-store jewellery sales as well as declining industrial production make themselves felt.
However, if China continues along its current path of seemingly wanting to achieve herd immunity, silver could continue to benefit from resuming industrial activity and sales. Furthermore, investors are keeping an eye on the rate and pace of the US Federal Reserve and other central banks’ interest rate hikes in the coming months, due to how they are likely to affect precious metals and other commodities.
The progress of the Russian conflict is also a key factor for metal prices, as currently silver is also seeing some safe haven demand, as the crisis rages on. This is also likely to continue due to expectations of slowing global economic growth this year, as well as a mild recession.”
Silver price forecast for 2023 and beyond
The World Bank’s Commodity Markets Outlook in October 2022 saw the silver price averaging $21 throughout the year, and staying constant at the same level throughout in 2024.
According to Trading Economics’ global macro models and analysts’ expectations, “silver is expected to trade at $20.02 per troy ounce by the end of this quarter”. The website expects the commodity to trade at $18.58 in 12 months’ time.
While analysts are typically cautious in issuing long-term forecasts for commodities, algorithm-based forecasting services regularly provide price outlooks for more extended periods.
Wallet Investor’s silver price forecast for 2023 was bullish as of 13 April. The website saw the precious metal closing the year at the $25.457 mark. The platform’s silver price forecast for 2025 saw silver growing even further to an average price of $29.254 by the end of that year, while its silver price forecast for 2027 had the commodity breaching the $30 price point to trade at an average of $32.857 by the end of the year.
Gov Capital, another algorithm-based forecasting service, issued a silver price prediction stating that the metal would close out 2023 at a potential average of $27.895. The platform sees silver rising to an average of $57.534 by the end of December 2025, $80.471 by the end of 2026, and $97.648 by December 2027.
No analyst or forecasting service provided a silver price forecast for 2030.
When considering silver price predictions, it’s important to remember that high market volatility makes it difficult to give long-term estimates. As such, analysts and algorithm-based platforms can and do get their predictions wrong.
Always do your own research before making an investment decision. And never trade or invest more than you can afford to lose.