PRECIOUS METALS | Analysts Cite Official Buying and Supply Constraints as Structural Support

Precious metals have continued to receive structural support from official-sector buying and tight mine supply through late June, according to analyst commentary. According to Jin10, FxEmpire analyst Arslan Ali said two forces have underpinned the sector: ongoing purchases by official institutions and constrained supply from new mine output. He said central banks have been increasing gold reserves as part of diversification efforts to hedge against high global debt levels and shifting monetary policy conditions, making this demand source relatively independent and a persistent source of buying. Ali also said new mine supply for both gold and silver has remained tight. He noted that gold output has not shown significant growth since a prior peak, citing aging mines and rising extraction costs. He added that silver faces similar constraints, though supply pressures are partly eased because silver is often produced as a byproduct of other metals. On the demand side, Ali said industrial demand for silver has remained strong in processing and manufacturing, particularly in sectors such as solar photovoltaics, electronics, and electric vehicles. He said this trend has been reinforced by the global energy transition, providing relatively stable structural support for silver prices, alongside silver’s role as a monetary asset. Ali added that investors in the precious metals market, including ETFs and physical metal holders, have also contributed to relatively steady demand for gold and silver.