(Kitco News) – Central bank demand for gold is flagging among last year’s top buyers, while silver demand from solar applications will remain strong even as Chinese installations dip, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that central bank gold buying is moderating as last year’s big buyers pull back.
“Central bank purchases in January were down 60% year-on-year to 18.5 tonnes,” they wrote. “The slowdown also reflects a thinning pack of buyers. Only 11 central banks bought gold in January – the lowest monthly count since January 2021. By comparison, on average more than 20 banks purchased gold per month in 2024, with the lowest monthly count at 17.”
Poland was the number one purchaser in 2024, adding 89 tonnes of gold to its reserves last year. “However, in January this year Poland ranked only fourth, buying just 3.1 tonnes – less than half its monthly average for 2024,” the analysts said. “Poland’s gold buying is tied to a clear objective: increasing gold reserves to 20% of total currency reserves. Based on current reserves and gold prices, Poland would need to purchase less than 50 tonnes in 2025 to hit that target – an achievable amount given last year’s total.”
“It is still early in the year but unless other central banks step in with fresh purchases, overall central bank gold demand in 2025 is on track to fall short of 2024 levels, which were ~1,000 tonnes,” they warned.
Gold prices have tested support at $2,900 per ounce multiple times on Monday, but the level has held up so far. Spot gold last traded at $2,908.06 per ounce for a small loss of 0.05% on the session.
Turning to silver, Heraeus said that even though total solar installations in China are expected to decline from last year’s record mumbers, technological shifts in solar manufacturing should keep silver demand strong in the sector.
“Solar PV capacity additions in China are expected to decline in 2025 to between 215 GW and 255 GW,” the analysts wrote. “This would mark the first annual fall in new capacity since 2019. In 2024, China added 277 GW of solar capacity to its grid, exceeding CPIA’s forecast that had set an upper boundary of 260 GW. Notably, installations have surpassed CPIA’s upper-end outlook for the past three years by an average of 35%.”
China is the global leader in solar installations, and the country also drives silver demand in the sector, consuming an estimated 232 million ounces in 2024. “However, a slowdown in China’s solar expansion does not directly translate into an equivalent plateau for silver demand, thanks to an established shift in cell technology.”
“TOPCon cells, which require 130-135 mg of silver per cell, consume significantly more silver than PERC cells, which typically require around 85 mg per cell,” they noted. “These more efficient TOPCon cells increased their share of China’s PV market from 23% in 2023 to 60% by the end of 2024. Assuming a 60/40 split between TOPCon and PERC in 2025, and listed silver loadings per cell, 255 GW of new Chinese capacity would translate into an estimated 171.8 moz of silver demand, based on installation location.”
“Globally, TOPCon’s share is forecast to exceed 84% by 2029,” Heraeus said. “Combined with the potential replacement of older cells alongside new installations, this technology shift reinforces upside to PV silver demand, even as installation growth slows in China.”
Silver prices are also testing support during Monday’s trading session, with multiple bounces off the $32.200 level. At the time of writing, spot silver last traded at $32.294 per ounce and is down 0.71% on the daily chart.
