Uncertainty over trade tariffs continues to support demand for gold as a short-term safe haven. In the long term, the growth of 5G networks and electrification are driving demand for silver, according to precious metals analysts at Heraeus.
In their latest update, analysts highlighted new investment in gold by Chinese insurers as a significant development. A group of 10 insurers has been given permission to invest up to 1% of their assets in gold bullion, which could increase investment demand by 2025. This increase in demand has already led to new all-time highs in gold prices in 2024, and the upward momentum is expected to continue with new capital inflows.
In addition, demand for gold in the artificial intelligence sector continues to grow. Chinese start-up DeepSeek has launched an artificial intelligence model that reduces hardware requirements, which could accelerate the adoption of the technology and, in turn, increase gold consumption in the necessary hardware. Although electronic demand for gold in 2024 is 15% lower than in 2010, the expansion of technology in sectors such as automotive and robotics could keep demand high.
On the other hand, the strength of the US economy and trade tensions continue to support demand for gold as a safe haven. Despite signs of economic strength, trade tensions add uncertainty to the economic outlook, which is likely to keep demand for gold steady in the medium term.
As for silver, the growth of 5G networks is helping to sustain demand. Global smartphone sales grew in 2024, with a significant increase in the share of 5G phones. Although 5G smartphones are not the main source of silver demand, 5G infrastructure, including base stations and antennas, relies heavily on this metal for conductivity. Total silver demand in 5G-enabled segments is expected to reach between 15 and 17 million ounces in 2025.
As 5G adoption expands and infrastructure deployment accelerates, industrial demand for silver will remain strong, reinforcing its long-term growth. Silver prices have shown volatility, but sustained demand from 5G infrastructure and other industrial uses suggests a positive outlook for this metal.
Ernesto Hoffman, Kitco