Silver Hits New High for the Year: Industrial Demand Recovery and Gold-Silver Ratio Correction

On July 28, 2026, the precious metals market saw a major shift—silver prices broke through the key resistance level of $30 per ounce, closing at $30.45, hitting a new high for the year. Meanwhile, gold prices edged up to around $2,390, and the gold-silver ratio quickly declined from 85x at the beginning of the month to 78.5x, indicating that silver is catching up with gold's rally.

Industrial Demand Recovery Becomes Core Engine

Global manufacturing PMI data released this week generally exceeded expectations. The US ISM Manufacturing Index came in at 51.2, returning to expansion territory; the Eurozone manufacturing PMI rose to 50.8, the first time above the boom-bust line since 2024; and China's official manufacturing PMI stabilized at 51.5. The collective recovery in manufacturing directly boosted industrial demand for silver, as silver has irreplaceable industrial properties in electronics, photovoltaics, and automotive sectors.

Particularly noteworthy is the solar industry. According to the latest report from the International Energy Agency (IEA), global new photovoltaic installed capacity is expected to exceed 450 GW in 2026, a year-on-year increase of 22%. Each GW of photovoltaic modules consumes approximately 15 tons of silver, meaning the photovoltaic sector alone will consume about 6,750 tons, nearly 30% of global mined silver output. Additionally, electric vehicle production continues to rise, with silver usage per vehicle about 2-3 times that of conventional fuel vehicles, further widening the silver demand gap.

Supply-Demand Fundamentals Continue to Tighten

Data from the Silver Institute shows that global silver production is expected to be 25,000 tons in 2026, while total demand will reach 28,000 tons, marking the fourth consecutive year of supply deficit. Major silver-producing countries such as Mexico and Peru face sluggish output growth due to declining ore grades and labor disputes. Meanwhile, physical silver investment demand remains strong, with US Mint American Eagle silver coin sales up 15% month-on-month, and Chinese silver ETF holdings hitting a record high.

Gold-Silver Ratio Correction Accelerates

Looking back from the beginning of the year, gold prices have risen about 18% while silver has only risen 12%, causing the gold-silver ratio to once climb to a historical high of 87x. Historically, when the gold-silver ratio is above 80x, it often signals a catch-up opportunity for silver. The current rally in silver is precisely a correction of its earlier lag.

Analysts point out that silver's volatility is typically 2-3 times that of gold, and once a trend is established, gains tend to be more dramatic. Considering that global central banks remain in an easing cycle with real interest rates staying low, precious metals as a whole are supported. Silver, with its dual industrial and financial attributes, often performs better in the early stages of economic recovery.

Outlook and Risk Warnings

• Short-term target: Technically, silver has broken above the $30 resistance, with the next target at $32 (the 2025 high). If gold can break above $2,400, silver is expected to accelerate upward.
• Key variable: If the US PCE price index and the Fed's interest rate decision due this week send a dovish signal, it will directly benefit silver.
• Risk factors: A weaker-than-expected global economic recovery, a decline in industrial demand, or a rebound in the US dollar index could all lead to a pullback in silver.

For investors, silver is currently in the middle of a long-term uptrend, but short-term excessive gains may face profit-taking pressure. It is recommended to adopt a phased position-building strategy, focusing on silver ETFs (such as SLV) or mining stocks.

(Xikang Finance Kind Reminder: The above analysis is for reference only and does not constitute investment advice. The market involves risk, and investment should be made with caution.)