Silver to make a comeback? Intraday surge hits a 12-year high, vying for gold's halo

Silver is stealing the spotlight from gold. On Thursday, spot silver surged by 4.5%, reaching above the key level of $36 per ounce, marking the highest level since February 2012. Alexander Zumpfe, a senior trader at German precious metals refiner Heraeus Group, pointed out that this rally is driven by technical momentum, improving fundamentals, and broader investor interest. Zumpfe stated: After lagging behind gold for weeks, silver is now catching up, indicating that trend investors are reigniting interest and rotating into silver. Over the past 12 months, benefiting from the escalation of the U.S.-led tariff war and continued large-scale gold purchases by central banks, gold has risen by as much as 42%. In contrast, silver has only increased by about 15%, clearly lagging behind. However, Thursday's explosive rise is narrowing this gap, with significant inflows into silver exchange-traded funds, and a daily increase of 2.2 million ounces in open interest. Meanwhile, as of the week ending May 23, fund management companies have also increased their bullish bets on Comex silver futures. Analysts point out that this inflow pattern often signals a larger trend. When safe-haven demand spreads from gold to silver, it typically indicates that investor demand for traditional safe-haven assets has reached a critical point, prompting a search for more resilient alternatives. Industrial Demand Builds Bottom Support Unlike gold, which has purely monetary attributes, silver has dual properties—it is both a financial asset and an industrial raw material. As an industrial raw material, silver plays a key role in clean energy technologies, particularly as a core material in solar panel manufacturing, with demand continuing to grow. This provides a solid fundamental support for prices to some extent. According to data from the Silver Institute, the silver market is heading towards a fifth consecutive year of supply deficits, with the supply-demand imbalance further deteriorating. Unlike gold, which purely relies on safe-haven demand, this structural shortage lays a structural foundation for silver price increases. Rate Cut Expectations as a Catalyst Changes in the macro environment provide the final piece of the puzzle for silver's rally. Data released on Wednesday showed a contraction in U.S. service sector activity and a slowdown in job growth. Consequently, Treasury yields fell, and swap traders began betting that the Federal Reserve would cut rates twice in October and December. A lower interest rate environment is generally favorable for non-yielding precious metals, and silver, due to its higher price elasticity, often performs more prominently in such environments. Analysts believe that this round of silver surges may just be the beginning—when safe-haven demand meets industrial shortages, combined with expectations of monetary easing, history tells us that such a combination often leads to price shocks that exceed expectations