Shifting interest rate expectations continue to take their toll on the precious metals market, with silver leading the selloff as prices start the week below $21 an ounce.
However, one precious metals research firm says the green energy transition should provide some support for the precious metal in 2023. The comments come as silver has seen sharp declines this month. March silver futures last traded at $20.635 an ounce, down nearly 1% on the day.
In their latest precious metals update, commodity analysts at Heraeus Precious Metals said that silver demand in the solar sector is expected to reach record highs this year following the 150 million ounces consumed last year.
Even as solar panel producers look for ways to reduce the amount of silver they need, a trend analysts describe as thrifting, the sheer volume of panels expected to be produced this year outweighs these potential limitations.
“The West’s energy transition is helping to drive silver demand growth. Despite the economic slowdown and possible recessions in the US and Europe, demand for renewable technology and solar photovoltaic (PV) modules is not expected to contract. Fiscal stimulus and government support for the energy transition is forecast to result in another record year for PV installations globally – including Europe and the US,” the analysts said.
Specifically, Heraeus said that it expects Europe to lead the world in solar demand as the region continues to wean itself off the reliance of imported oil and gas. According to the European Union’s green energy transition plan, REPowerEU, it could spend up to €26 billion to support rooftop solar panels in the next four years.
The other nation to watch will be China, the world’s largest producer of solar panels. Economists expect China’s manufacturing sector and economy to pick up as the government removes its harsh COVID-19 restrictions; however, China’s reopening has so far not gone as smoothly as expected.

“Industrial PMIs in China are currently sluggish, remaining below 50 (contraction) in January for the sixth straight month. In contrast, domestic photovoltaic module output in January was 8.6% higher month-on-month at 29.1 GW, and is predicted to reach >30 GW in February. Overall productivity should increase later in the year as the labor force recovers from the pandemic. Production capacity growth in the PV supply chain last year, plus that under construction, should mean that PV module output can meet demand, supporting requirements for silver paste in PV uses,” the analysts wrote in the report.
The relatively bullish outlook for silver’s industrial demand comes as the precious metal fell to a three-month low Monday as the market continues to react to expectations that the Federal Reserve will have to raise interest rates higher and maintain its aggressive stance longer than expected to bring inflation pressures down.
Bond yields have risen sharply due to the market’s shifting interest rate expectations, with two-year yields pushing above 4.8%; meanwhile, 10-year yields have moved closer to 4%.
Another significant headwind for silver remains the U.S. dollar, which remains resilient against a basket of global currencies. The U.S. dollar Index is currently holding around 104 points, its highest level since the start of the year.