Silver is likely to outperform gold in 2025 with greater upside potential for prices.
Both gold and silver are expected to remain well supported this year as the two metals continue to be the top picks for investments.
However, Ole Hansen, head of commodity strategy at Saxo Bank believes that silver prices have more potential compared with gold this year, and the outlook is skewed to the upside.
Both gold and silver prices had a stellar 2024. Gold prices had risen 27% last year, while silver edged higher by more than 20%.
At one point in 2024, returns from holding silver were significantly more than that of gold.
Gold vs silver prices in 2025
According to a Kitco.com report, Hansen forecasts gold prices to climb to $2,900 per ounce this year, representing a gain of 7% from current levels.
However, Hansen believes that silver has more potential with prices likely to reach $38 an ounce later in 2025. This translates to about 30% growth from current levels.
At the time of writing, the March silver contract on COMEX was at $31.090 per ounce, down 0.2%. The February gold contract was at $2,734.74 per ounce, down 0.5% from the previous close.
Though returns from gold will not be as high as silver this year, the precious metal is expected to remain an important asset this year.
Gold, a precious metal historically recognized for its stability and intrinsic value, will continue to play a crucial role as a safe-haven asset in the coming years.
This means that during times of economic uncertainty, geopolitical tensions, or market volatility, investors will likely turn to gold as a way to protect their wealth.
Gold’s safe-haven value
The enduring appeal of gold as a safe haven stems from its scarcity, its resistance to inflation, and its global acceptance as a form of currency and store of value.
“The demand for investment metals has been fueled by an increasingly uncertain geopolitical landscape, where global tensions and economic shifts have led investors to seek safer assets, a development that shows no signs of fading anytime soon,” Hansen said.
Additionally, concerns about mounting global debt, particularly in the United States, have prompted investors to hedge against economic instability by turning to precious metals.
He said that investors would have to be patient with the Federal Reserve’s monetary policy.
The US central bank’s hawkish stance could bolster the dollar and lead to volatility in the precious metals market.
This contrasts sharply with expectations from a few months ago, as markets are now pricing in only one rate cut this year.
Silver’s dual role
Hansen, however, is more optimistic about silver due to its dual role.
As silver is also used as an industrial metal, demand for the metal is likely to increase sharply in the coming years.
Its use in batteries of electric vehicles (EVs), makes it a valuable commodity.
Hansen noted:
In 2024, increased industrial demand helped create physical tightness in the silver market. Sectors such as electronics and renewable energy, particularly photovoltaic (solar) technologies, significantly contributed to this surge. The expectation of sustained industrial demand is likely to keep silver in a supply deficit into 2025, potentially deepened by a pick-up in ‘paper’ demand through exchange-traded funds.
According to the Kitco report, Hansen expects the gold-to-silver ratio to decline to around 75 points from 88, currently.
The upside potential for silver prices this year stems from the fact of increasing electrification of the global economy. Metals involved in electrification have more potential than those in construction, such as copper, aluminium and others.
“Among the industrial metals, we maintain our bullish long-term view on metals that support the energy transition, particularly copper and aluminum, driven by investments in the power grid, along with rapid growth in renewable energy installations from EVs to solar and wind turbines,” Hansen said.
“On the other hand, we see limited upside for those dependent on demand from the construction sector, such as iron ore and steel,” he added.
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