Silver's Rally Runs on Scarcity and Record Chinese Buying

Silver's price has been steadily increasing over the past few weeks, reaching a seven-week high of $66 per ounce. The surge in silver prices can be attributed to two main factors: record Chinese buying and a persistent supply gap.

The most striking data point comes from Beijing, where Chinese imports of silver-bearing ores jumped 62.5 percent year-on-year in June, reaching 219,000 tonnes. This demand is deeply industrial, driven by China's expansion of its solar manufacturing capacity and power grid infrastructure, which consume silver as a critical input.

The bull case for silver rests on a supply picture that looks increasingly tight. The Silver Institute projects that 2026 will mark the sixth consecutive year of demand outstripping supply, with the deficit expected to widen by 15 percent from the prior year to 46.3 million ounces.

Traders are split on whether a 25-basis-point hike will follow in September, and the inflation print due shortly is widely seen as the near-term catalyst that will determine whether silver extends its run or consolidates further.