Silver and copper prices rebound on increased industrial demand from AI data centers

Following a surge in gold prices, silver and copper values are also climbing, fueled by robust industrial demand, notably from the expansion of artificial intelligence (AI) data centers. This trend highlights the growing importance of these metals in technological advancements.

Silver's price has seen a significant jump, with September futures rising about 19% from late July to $68.75. Industrial applications constitute more than half of silver's consumption. Recently, it has become a key material in AI servers and high-performance data centers, utilized for its ability to reduce heat and resistance, thereby enhancing efficiency and performance.

Copper prices are also nearing their record highs, with futures trading at $10,442 per ton, a 4.3% increase from late July. Copper is indispensable not only for direct use within data centers but also for constructing the necessary power grid infrastructure. Experts attribute the rising copper demand to increased electricity consumption, coupled with the expansion of power transmission and distribution networks, AI data centers, and defense sector needs.

Currency fluctuations are also impacting precious metal prices. The U.S. dollar's weakness, partly due to concerns over the U.S. Treasury's expanded bond buyback program, has led to a decline in both the dollar and U.S. Treasury bonds. This has driven investors towards gold, silver, and copper as a hedge against currency devaluation.

However, experts caution that silver and copper are subject to significant volatility due to their sensitivity to industrial trends. Unlike gold, which has central banks as long-term buyers, silver's market is thinner, leading to greater inherent price swings. Similarly, copper prices may have already factored in expectations of increased AI data center investment, suggesting potential for further fluctuations.