Silver Extends Gains, Supported by Supply Deficits and Rising Industrial Demand

Silver prices in local markets recorded significant gains last week, amid global volatility after spot prices touched their highest levels in more than 14 years before retreating due to signs of easing trade tensions.

In Egypt, 800-grade silver opened trading at EGP 52 per gram, climbed to EGP 54, and closed the week at EGP 53. The price for 999-grade silver reached EGP 66, while 925-grade silver stood at EGP 61, and a silver pound coin (925) was priced at approximately EGP 488.

Globally, spot silver started the week at $38.11 per ounce, peaked at $39.91—the highest since 2011—before closing at $38. Silver came close to breaching the $40-per-ounce threshold, but a sudden U.S. announcement regarding an imminent trade deal with the European Union triggered a rapid pullback.

Domestic Market Dynamics

Local gold markets experienced a modest recovery in sales during Egypt’s high school exam results season, as many families purchased silver coins and bars as gifts. Additionally, individual investors increasingly turned to silver as an alternative investment to gold, which has reached record price levels.

Trade Developments and Monetary Policy Impact

The silver rally coincides with an approaching trade deadline on August 1, as several nations—including Mexico, Canada, and the EU—work to finalize agreements aimed at mitigating tariff impacts, particularly on major silver-producing countries. Such deals could stabilize supply chains and prevent shortages that might otherwise push prices sharply higher.

Analysts suggest that once these agreements are finalized, the U.S. Federal Reserve may move toward interest rate cuts. This could place additional pressure on the U.S. dollar, which has already lost about 11% of its value since the start of the year. Should the Dollar Index fall to 92—its level during former President Donald Trump’s term, representing another 5% decline—it could become a strong catalyst for precious metals, with projections pointing to silver potentially reaching $50 per ounce and gold $4,000 per ounce within the next 12 months.

Market Trends and Structural Drivers

Silver prices have risen 29% in Egypt since the beginning of 2025, adding EGP 12 to the price of 800-grade silver. On the global stage, silver has surged by 31%, from $29 to $38 per ounce, outperforming most other metals during the same period.

This growth is attributed to several factors, including expectations that the Federal Reserve will keep interest rates unchanged in its upcoming meeting, growing concerns over a global economic slowdown, persistent supply chain disruptions, and increasing industrial demand—particularly from the solar energy and technology sectors.

Gold-Silver Ratio and Valuation Perspective

The gold-to-silver ratio has fallen to 86, down from over 100 in April, while its historical average ranges between 50 and 60. This decline suggests that silver remains undervalued relative to gold. Analysts note that if the ratio were to revert to its historical mean without a significant change in gold prices, silver could exceed $63 per ounce—a potential 65% gain from current levels.

Future Outlook and Historical Context

Adjusted for inflation, historical data shows that silver’s peak price in 1980 would equal about $197 per ounce today, while the 2011 rally corresponds to roughly $71. This indicates that current levels around $38–$39 remain relatively low, leaving room for further appreciation if supportive market conditions persist.

Silver is regaining its role as a trusted safe-haven asset amid an environment marked by heightened geopolitical tensions, inflationary pressures, and financial market volatility. Historically, like gold, silver has served as a store of value during crises but offers the additional advantages of greater accessibility and affordability for retail investors. With deepening supply deficits and rising industrial and investment demand, the silver market appears firmly positioned in a bullish phase, offering attractive opportunities for those seeking tangible assets that combine growth potential with defensive characteristics.