Silver Prices Rise Locally as Market Eyes U.S. Inflation and Tight Global Supply

Silver prices rose in the local Egyptian market on Wednesday, supported by the relative stability of the global spot price, despite a minor decline following the release of weaker-than-expected U.S. industrial inflation data for June. The data kept pressure on the U.S. dollar and boosted demand for non-yielding assets like silver.

According to a report by the Safe Haven Hub, the price of 800-purity silver rose from EGP 52 to EGP 53 per gram. Meanwhile, 999-purity silver reached EGP 66 per gram, 925-purity stood at EGP 61, and a 925 silver pound was priced at around EGP 488.

Global Silver Eases Slightly After Hitting 14-Year Highs

Globally, silver retreated from $38.32 to $37.65 per ounce in a normal corrective move after nearing a 14-year high of $39.13 earlier this week, as some investors moved to take profits.

Mixed U.S. Inflation Data Keeps Dollar Under Pressure

The U.S. Producer Price Index (PPI) showed notable deceleration in June, with headline PPI registering 0.0% month-on-month, missing expectations of 0.2%. Year-on-year, it fell to 2.3%, down from 2.6% in May. Core PPI (excluding food and energy) also came in weaker than expected at 0.0% monthly and 2.6% annually.

This followed Tuesday’s Consumer Price Index (CPI) data, which showed headline inflation in line with forecasts but a slightly lower core reading. This mixed picture reduced the likelihood of imminent rate cuts, weakening the dollar and supporting demand for hedging assets like silver.

Rising Industrial Demand Meets Growing Supply Deficit

Silver has been on a strong upward trend since April, fueled by multiple factors — intensifying global trade tensions, new U.S. tariffs, supply shortfalls in key markets, rising global interest rates, and tightening liquidity in metals exchanges like the LME.

A report from the Silver Institute revealed that silver-backed ETFs held over 1.13 billion ounces as of June 2025, with net inflows of 95 million ounces in the first half of the year — already surpassing full-year 2024 levels.

The Institute also projected industrial demand to reach 677.4 million ounces in 2025, driven largely by booming demand from green industries, particularly solar panels and photovoltaic technologies, amid rapid global growth in clean energy projects.

Fifth Consecutive Year of Market Deficit

Despite surging demand, silver supply remains under severe pressure due to production disruptions in major mining countries like Mexico and Russia, along with declining output from primary mines. Over 70% of global silver supply now comes as a byproduct of other metals.

The market deficit is estimated at 182 million ounces for 2024, with an additional 117.6 million ounces expected in 2025. Above-ground inventories are nearing critical levels, while U.S. premiums for physical silver continue to rise.

Silver Eyes $50 Per Ounce as Breakout Momentum Builds

After breaking above the $35 level in June, analysts believe silver is now on track to test $50 per ounce in the near term, driven by strong investment demand and limited available supply — currently estimated at just 155 million ounces.

Analysts at Citi Bank forecast silver will continue its ascent over the next 12 months, projecting it may reach $40, and possibly $46 by Q3 2025, citing sustained trade tensions and expanding industrial demand.

Market Fundamentals Support More Upside

Silver remains significantly undervalued based on historical ratios. The current gold-to-silver ratio stands at 87.3, well above the historical average of 53. A return to this average — assuming stable gold prices — would imply a silver price of around $63.30, or a 65% increase from current levels.

Adjusted for inflation, silver’s all-time high of 1980 would equal $197 today, and its 2011 rally peak would be $71, indicating considerable upside from the current price of $38.40 per ounce.

Short Position Overhang and Risk of a Short Squeeze

Despite the rally, global investment banks maintain large short positions in silver futures. As of July, short positions stood at 52,324 contracts, equivalent to 262 million ounces — roughly one-third of the world’s annual silver production.

Many of these contracts are unbacked "paper silver," posing a growing risk of a short squeeze if prices keep rising. This could force investors to cover their positions rapidly, potentially triggering a sharp price spike.

The risk is heightened by the high ratio of paper-to-physical silver, currently estimated at 375 paper ounces for every one physical ounce available — a precarious setup that could lead to an explosive rally if physical demand surges.

Asian Demand Boosts Market Outlook

India imported 197 tonnes of silver in June 2025, up 81% year-on-year. However, this was lower than May’s record of 544 tonnes, indicating a modest cooldown after an unprecedented buying spree.

Silver Reclaims Its Place as a Strategic Asset

With its dual role as a safe-haven and industrial metal, silver is proving itself not just a precious commodity but a strategic asset. Amid tightening supply, robust industrial demand, and financial market uncertainty, silver may emerge as the surprise outperformer of H2 2025 — possibly even outshining gold.