Investing.com - Silver prices could see headwinds in the near term due to broader economic uncertainty, although the metal has received support from global consumption outpacing supply, according to analysts at Bank of America.
A stronger US dollar and weak industrial activity has placed pressure on silver recently, while President-elect Donald Trump's plans to impose strict import tariffs on Canada and Mexico -- key suppliers of the metal to the US -- have threatened to dislocate silver markets, the analysts said in a note to clients.
However, silver's price has hovered at around $30 an ounce over the past nine months. By 04:02 ET (09:02 GMT) on Thursday, silver was trading up by 0.5% at $30.81.
The BofA analysts led by Michael Widmer argued that, in their view, this resilience has been tied to "consistent silver market deficits", with "limited mine production growth [...] a key source of price support" in particular.
Global consumption of silver outpaced production of the metal in both 2022 and 2023, and is expected to have done so yet again in 2024, research from BofA found.
They estimated that 37,083 tonnes of silver will be consumer this year, down by 0.4% from the projected amount in 2024, while output is seen edging up by 3.5% to 33,021 tonnes. Despite the change, the silver market would remain in deficit -- a trend the BofA analysts anticipated will continue into 2026.
"[T]he silver market has been in deficit for a while now and those shortfalls finally count," the analysts wrote. They noted that this support has been mirrored in some regions, with silver "trading at a premium" in India and consumers in China having to "pay up to source ounces."
As a result, the analysts said silver has "solid fundamentals", adding that they are "constructive further out" on the metal.
"Silver won’t lose its luster long-term," they said.