Following a challenging year for silver, reflected in the muted price performance of 2018, the Silver Institute expects 2019 to be a better year for the metal and that prices will regain some shine.

The Washington-based nonprofit industry association says it expects sentiment for the silver market to be “more supportive” in 2019, noting that the year has already proven to be good for silver investors.

The US Mint, for example, sold 12% more American Eagles coins in January, compared with the same month last year. The expected slowdown of the US rate hiking cycle should also benefit silver.

The institute pegs the silver price at an average of $16.75/oz in 2019, which is a 7% increase on last year’s average price. On Wednesday, silver fetched $15.74/oz.

“The volatility in the equity markets is motivating investors to look for alternative options such as precious metals, which will boost silver investment."

Bullion coin demand has been strong in the US during January and the institute says that demand in Europe and India will be supportive of global growth in the year. Silver physical investment demand is expected to increase by 5% in 2019.

Silver demand from industrial fabrication, which is responsible for about 60% of total demand, is forecast to rise modestly in 2019. Silver demand from brazing alloys and solders, as well as electrical and electric applications is expected to rise again this year. This is on the back of continued demand from the automotive sector, which uses an increasing amount of applications, such as safety features, window defogging and infotainment systems, and for electric and hybrid vehicles.

The Silver Institute has also highlighted growing demand from a variety of additional sectors, such as water purification, chemical applications, LED lighting, flexible electronics and screens, as well as anti-microbial applications in textiles.

Photovoltaic (PV) demand has also expanded considerably in recent years and the institute notes that PV demand will continue to be supportive of silver usage, as many government continue to provide incentives to install more solar power.

Jewellery demand is forecast to record a solid year of growth, with Thailand set to be one of the driving forces.

India is the largest consumer of silver with imports having reached 225-million ounces last year.

The downstream sectors are expected to absorb all the silver produced this year, with the market forecast to be in balance for the third consecutive year.

Silver mine production is seen declining by 2% this year and silver scrap output is expected to pick up modestly, following four consecutive years of stable scrap flows.

In the past 12 months silver had achieved a high of $17.22/oz before falling below $16 since July to reach a low of $13.98. On Tuesday silver traded at $15.79.