Silver Continues Rally Amid Global Tensions and Rate Cut Expectations
Silver prices witnessed notable fluctuations in the local market over the past week, influenced by volatile movements on global exchanges. The metal touched its highest level in over 14 years before retreating due to profit-taking by some investors.
Local Market Performance
In the local market, the price of 800-purity silver ranged between EGP 52 and EGP 53 per gram before settling back at EGP 52 by the end of the week. The 999-purity silver was priced at EGP 65 per gram, while 925-purity silver stood at EGP 60. The price of a silver pound coin (925) is recorded at around EGP 480.
Global Market Movements
Globally, silver opened the week at $38.32 per ounce, rose to a peak of $39.13 — the highest since 2011 — then declined to $37.65, and finally closed the week at $38.11, marking a slight weekly drop of $0.11.
Strong Performance Year-to-Date
Since the beginning of 2025, silver prices have surged 27% in the local market, with the 800-purity silver rising by EGP 11 after starting the year at EGP 41. On the global front, the metal has jumped 32%, climbing from $29 to $38.11 per ounce, outperforming most other precious metals over the same period.
Despite the recent slight pullback, the overall trend remains bullish. Silver is currently trading above short-term price averages, indicating continued buying momentum in the market.
External Drivers Supporting Silver's Rally
Several external factors have contributed to silver's upward trajectory this week, including:
Falling U.S. Bond Yields
The yield on 10-year U.S. Treasuries fell to 4.42%, while 2-year yields dropped to 3.87%, reducing the opportunity cost of holding non-yielding assets like precious metals, and boosting silver's appeal among institutional investors.
Rising Expectations of Rate Cuts
Federal Reserve Governor Christopher Waller called for early action on interest rate cuts, possibly as soon as July, citing signs of weakness in the private labor market. Markets are now pricing in a 45-basis-point cut by year-end, with the first move expected in September.
Dollar Weakness
The U.S. Dollar Index closed at 98.462, down 0.16% in the last session, despite weekly gains. The decline was driven by falling bond yields, mixed inflation data, and growing political pressure on Fed Chair Jerome Powell.
Escalating Global Trade Tensions
President Donald Trump reignited trade fears by threatening to impose tariffs of 15% to 20% on European goods. Additionally, trade negotiations with both Japan and Indonesia remain stalled, adding to global economic uncertainty.
Can Silver Sustain Its Momentum?
According to analysts at Citibank, silver's strong rally, especially since April, points to further upside potential. The bank forecasts prices reaching $40 within the next 6 to 12 months, and possibly hitting $46 by Q3 2025, supported by increasing industrial demand, tightening global supply, and ongoing geopolitical and monetary uncertainty.
Some analysts also argue that silver remains undervalued based on the gold-to-silver ratio, which currently stands at around 87.3 compared to the historical average of 53. A return to this average, assuming gold prices remain steady, would suggest silver should trade above $63 per ounce — a 65% increase from current levels.
Historically, silver's 1980 peak would equate to around $197 per ounce in today's dollars, while its 2011 surge saw prices near $71, implying that silver still has substantial room to rise from current levels near $38.40.
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