(Kitco News) – The Trump administration’s trade tariffs will likely continue to boost gold prices, while inconsistent silver demand for China’s solar production is contributing to price volatility, according to precious metals analysts at Heraeus.
In their latest precious metals update, the analysts noted that physical gold sales remain weak even as ETF demand supports the gold rally.
“Gold investment is expected to be a key area of demand strength this year, as other applications and jewellery demand have taken a severe hit from sky-high prices,” they wrote. “However, year-to-date investment demand has primarily been focused on gold-backed ETFs – particularly in Asia. Total bar and coin demand improved by only 3% year-on-year in Q1’25 (source: World Gold Council), and sales data from major global Mints also point to relative weakness. Gold Eagle coin sales from the US Mint were 40% lower year-on-year to the end of April, and cumulatively over the first four months, sales are the lowest since 2019.”
Heraeus pointed out that high prices are not seeing investors shift to lower-weight coins. “Sales of half-, quarter- and tenth-ounce coins are also very low on a historical basis,” they noted. “Sluggishness is not universal, as on the other side of the world, sales of bullion products from the Perth Mint have been on the rise year-to-date (+5% year-on-year). Exchange-traded funds saw some profit-taking over the last 30 days, as total global gold holdings fell by 1.36% to 88.3 moz and the gold price continues its consolidation phase.”
Regarding the Trump trade war, the analysts noted that the Federal court ruling against April’s reciprocal tariffs impacted bullion prices and the U.S. dollar.
“Initially, safe-haven gold declined, the US dollar weakened and the stock market rose,” they said. “However, this is likely to be just another twist in the current trade war as the White House swiftly appealed against the decision and signalled it may take the case to the Supreme Court if necessary. Uncertainty in financial markets and the path of interest rates are still supportive for gold.”
Gold finished last week’s trading 2.57% lower, but the analysts noted the formation of a potential bull flag pattern on the charts. Spot gold is seeing strong buying interest to start the week as it rapidly approaches the $3,400 per ounce level, last trading at $3,374.52 per ounce for a gain of 2.58% on the session.
Turning to silver, Heraeus said that Chinese solar installations are on track to break records once again in 2025, but the sector could still provide some headwinds for prices.
“After a slower year for new installations in 2024, totalling 277 GW, installations have seen a push in the first four months of this year,” they wrote. “As of April, China had installed 105 GW of new capacity, with 45 GW installed in April alone. Annualised, this comes to an estimated total of 315 GW for the year, which would be a record, and 13% higher year-on-year. This is approximately equal to the expected rate of thrifting of silver content this year. Therefore, despite the potential for a record-breaking year for photovoltaic capacity deployment, solar silver demand is at risk of remaining in line or falling slightly below last year’s level of ~195 moz (source: The Silver Institute).”
The analysts noted a rapid increase in silver nitrate production in China during April. “Since then, production has reportedly declined, with silver nitrate plants reducing their capacity utilization,” they warned. “This suggests some downside risk for solar silver demand over the next few months.” The silver price declined in line with gold last week, losing 1.75% over the previous week to close at $33.03/oz.
After declining 1.75% last week, silver is actually outpacing gold’s strong performance on Monday after breaking decisively through the $34 resistance level shortly after 10 a.m. EDT. At the time of writing, spot silver last traded at $34.27 per ounce and is up 3.89% on the daily chart.
