Silver Defies Deficit with Price Stability Amid Shifting Industrial Landscape

The silver market has shown resilience in the face of a tighter monetary backdrop and a shift in one of its key industrial end-markets. Despite a sixth consecutive annual deficit, projected at 46.3 million ounces, and stagnant mine supply, the metal's price has remained firm. Silver closed the week at $66.78 per fine ounce on COMEX, up 1.6% on the day and 2.7% across the week.

The recent policy rate hike by the Bank of Japan to a 31-year high is contributing to higher benchmark rates, making non-yielding assets less attractive. This has led to a selloff in US fixed income, with yields on ten-year Treasuries climbing to around 5.00% on Wednesday.

However, softening oil prices and the dollar's retreat from its recent multi-week peak have given precious metals room to breathe, contributing to silver's lift. Meanwhile, Asian module makers are accelerating the production of silver-free photovoltaic panels, which could lead to a decline in silver demand from the solar sector for a second consecutive year.