Silver continues to attract investment support amid easing US rate hike expectations, increased ETF inflows, and retreating oil prices, with analysts seeing potential for further gains despite market volatility.
Silver is still drawing support from a softer outlook for US interest rates, even after the latest pullback from a three-month high. Praveen Singh, head of commodities at Mirae Asset ShareKhan, said spot prices are likely to remain in a consolidation phase with an upward bias after last week’s sharp advance, helped by weaker bets on further Federal Reserve tightening, better exchange-traded fund inflows and a retreat in oil prices.
That backdrop has mattered because silver tends to benefit when real yields ease and the dollar loses momentum. On August 13, the metal was trading below its recent peak after the July US consumer price report matched expectations, prompting some profit-taking. Earlier in the week, silver climbed to its highest level since June 22 as investors responded to signs that inflation was cooling and that the Fed might not need to keep raising borrowing costs.
The broader macro picture has also turned slightly more favourable for the metal. Recent US inflation data showed headline consumer prices easing to 3.4% in July from 3.5% in June, while core inflation slipped to 2.5% from 2.6%. Producer prices also came in softer than expected. At the same time, US Treasury yields have fallen and the dollar has weakened from its late-June high, while market pricing now implies a lower chance of a Fed move at the September policy meeting than it did a month ago. Earlier commentary from Singh had also warned that silver could still be volatile and swing sharply with shifts in rate expectations and West Asia tensions.
Physical and investment indicators, however, remain mixed. Global silver ETF holdings have recovered from their recent low but are still below levels seen at the start of the year, while COMEX inventories have risen from April’s trough even though they remain far below last year’s peak. Shanghai inventories have surged from March lows, and the one-month LBMA lease rate remains negative, suggesting no immediate shortage. Chinese imports of silver-containing ores also jumped sharply in June as solar manufacturing and grid investment continued to support industrial demand.
Against that backdrop, Singh said silver could extend its rally towards $68 in the near term, though he expects the market to pause and digest recent gains first. He added that traders may consider buying on dips, with a stop below $62.90, but the recent strength sits uneasily alongside rising Chinese stocks and the still-unsettled oil and geopolitical outlook.
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