Silver prices may rise as much as 38 percent in 2013 from current levels, as a weak global economy spurs safe-haven demand for the precious metal, the global head of metals analytics at GFMS, a Thomson Reuters unit, said on Wednesday.

Spot silver has gained more than 17 percent so far this year, outstripping a rise of 10 percent in gold, and setting course for its third yearly rise in four. Silver was trading at around $32.50 per ounce by 1020 GMT.

“Strong investment demand, higher gold prices on the back of monetary easing, rising inflation expectations and the persistence of ultra-low interest rates,” are among the factors that will lure buyers to the safety of silver, Philip Klapwijk, said on the sidelines of a conference in Hong Kong.

“We are thinking prices will trend higher next year. I’m not convinced that we are going to $50. I think we will definitely see $40 to $45 prices.”

Evidence of strong investment demand is shown by an increase of 4.5 percent this year in holdings on the largest silver-backed ETF, New York’s iShares Silver Trust.

Klapwijk also noted a limited growth in jewellery demand, particularly in the emerging markets.

“In China, for example, jewellery demand is growing at a double digit pace,” said Klapwijk, who expects silver prices to trade between a low of $30.90 and a high of $36 for the rest of 2012.

But he cautioned that the surplus in the silver market was expected to edge up to 300 million ounces in 2012 from a year ago, hurt by weaker demand for silver fabrication.

This comes at a time when mine production is seen climbing 4 percent in 2012, driven by a strong project pipeline and high precious metal prices, he said.

There were two key reasons for weaker fabrication demand this year, Klapwijk added.

One was that industrial fabrication has slowed considerably and sentiment has been hurt by weakness in demand from the electronics field and photovoltaic end users, hit by cuts in solar power subsidies in Europe.

(Writing by Himani Sarkar; Editing by Clarence Fernandez)