(Kitco News) – Gold is beginning to see increased interest from U.S. and UK investors, while silver prices face downside risks from less metal-intensive solar technologies, according to precious metals analysts at Heraeus.
In their latest precious metals report, Heraeus noted gold’s strong move following Thursday’s CPI print for June, which showed a 3.0% year-over-year rate in headline inflation, the lowest reading since June 2023.
“The news also injected more confidence for the market to see a rate cut delivered by the Fed soon,” they wrote. “The gold price rose by over $30/oz from the news on Thursday as the dollar weakened, a sign that rate cuts delivered this year could hit the dollar hard and open up possibilities above $2,400/oz for gold.”
They also pointed out that the yellow metal saw strong ETF inflows of around 1.1 million ounces over the past two weeks, with funds in the UK and U.S. accounting for most of the gains.
“Against a backdrop of managed money gold futures long position liquidation, ETF investors are beginning to pick up the pace of investment purchases, which has helped the gold price retain its current level,” they said. “Managed money long futures positions have been reduced by 9% since the end of May to 19.8 moz, according to the most recent data. Meanwhile, the gold price has risen by more than 3%.”
“The winding down of futures positioning during price appreciation potentially allows for momentum to build again during the next rally, taking gold higher,” the analysts said. “This could be accentuated if a trend of gold ETF inflows is more firmly established. However, ETF holdings are only a couple of months removed from the post-Covid low of 80.5 moz, and sentiment is yet to turn firmly positive.”
Gold prices are seeing renewed momentum on Monday, with spot gold last trading at $2,434.82, up exactly 1.00 percent on the day.
Turning to silver, Heraeus noted that new innovations in the photovoltaic sector could lower the amount of the gray metal required for the next generation of solar cells.
“The China PV Industry Association (CPIA) has published data showing that in 2023, the solar PV sector consumed 220 moz of silver, or 18% of global total silver demand, with solid growth expected again this year – particularly if China managed to beat its own forecasts (as is typically the case),” they wrote. “Advanced solar cells are generally more silver intensive, especially in the still commercially immature HJT cells that are expected to make up approximately 30% of market share by 2030.”
“However, the CPIA reported that there is growing adoption of new technologies by Chinese solar manufacturers, including Zero Busbar and LECO technologies, that could effectively lower silver paste consumption per cell,” they said. “These technologies are anticipated to cut silver loadings from the current 109 mg/cell in TOPCon cells to 80 mg/cell and from 200+mg/ cell to 70 mg/cell in HJT cells in 2030.
With the IEA forecasting that annual solar installations will more than double between 2022 and 2028, the analysts believe these innovations “may offset some high demand projected for the sector dominated by a group of major Chinese manufacturers.”
Silver prices are also trending upward to start the week, though they’ve seen only about half of the percentage gains that gold has enjoyed. Spot silver last traded at $30.952 for an increase of 0.54% on the session, with Heraeus warning that the gray metal is likely to face resistance when it tests the $32.01 level for the third time.
