Silver Prices Eye $68 as Global Markets Seek Stability, Analysts Say
Silver is positioning itself for further gains, with analysts at Mirae Asset ShareKhan projecting a near-term target of $68 per ounce. This comes as global investors reassess expectations around United States interest rates, with the metal trading at $64.73 on the night of August 13, down 0.90 percent for the day after touching a high of $66.79 on August 11.
What is driving the silver price outlook?
The primary driver behind silver's recent strength is the shifting sentiment regarding US Federal Reserve policy. According to Praveen Singh, head of commodities at Mirae Asset ShareKhan, the probability of a Fed rate hike at the September FOMC meeting has declined sharply from 75 percent a month ago to 35 percent. Similarly, the likelihood of a hike by year-end has fallen from 90 percent to 70 percent.
This moderation in hawkish expectations has encouraged investors to return to precious metals. Global silver ETF holdings now stand at 797 million ounces, up 2 percent from the cycle low reached on July 14, as investors seek refuge from currency volatility and uncertain geopolitical conditions.
How are US inflation figures affecting the market?
The July US Consumer Price Index (CPI) report confirmed a disinflationary trend. Headline CPI edged lower from 3.5 percent in June to 3.4 percent in July, trailing the estimate of 3.5 percent. Core CPI cooled from 2.6 percent to 2.5 percent, matching forecasts. The Producer Price Index (PPI) also showed cooling, with year-on-year PPI dropping from 5.5 percent to 4.7 percent.
These figures suggest that the Federal Reserve may have less need to raise rates aggressively, which typically supports precious metal prices by reducing the opportunity cost of holding non-yielding assets.
What role are geopolitical tensions playing?
The situation in the Strait of Hormuz remains a critical factor for commodity markets. Although Pakistan reported that the US and Iran were close to a deal that would partially reopen the Strait, the situation remains unresolved. Iran has demanded concessions from the United States, including reparations for war damages and the unfreezing of Iranian assets, while President Trump has called for compensation for US soldiers killed and for protests earlier this year.
Iran has denied US claims that the Strait is open and reaffirmed that no ship will transit without formal approval from Iranian authorities. At the time of writing, Brent oil futures were trading at $87.78, down 1.5 percent for the day.
The International Energy Agency has revised its Q3 oil deficit higher from 0.80 million barrels per day to 1.8 million, though it sees the market tipping into a surplus of 4.6 million barrels per day in 2027.
Is there supply concern for silver?
Despite the positive price outlook, some fundamentals warrant caution. The one-month LBMA lease rate stands at -0.16 percent, which does not reflect any immediate supply concerns. The long-term lease rate average is 0.3-0.6 percent. However, Shanghai on-warrant daily total silver stock has surged over 400 percent from the cycle low of 252 tons seen in March.
Chinese imports of silver-containing ores jumped 62.5 percent year-on-year in June to 219,000 tons, driven by industrial demand as the nation expands its solar manufacturing capacity and power grid infrastructure. This industrial demand provides a solid foundation for silver consumption, even as investment flows fluctuate.
What is the technical outlook for silver?
Spot silver is expected to consolidate its gains after rising a whopping 12 percent last week. While intrinsic fundamentals are not very encouraging at present, the white metal can extend its rally to $68 in the near term. Analysts suggest traders may buy dips with a stop loss below $62.90 for a target of $68.
Key data to watch in the coming days includes US retail sales, University of Michigan sentiment, and inflation expectations on August 14, followed by housing starts and industrial production on August 18. China's property data and retail sales will be released on August 17.
For Botswana investors and savers, the silver market offers an interesting hedge against global currency volatility. As always, prudent diversification and careful attention to market fundamentals remain the cornerstone of responsible investment.
Disclaimer: This article is based on analysis by Praveen Singh, head of commodities at Mirae Asset ShareKhan. Views expressed are his own. Readers are advised to exercise their own judgment and consult financial advisors before making investment decisions.