Silver Remains Bullish above $26,50, but Trails Gold

Silver Performance

Yesterday, silver broke above the $30 mark for the first time since mid-July but struggled to maintain its momentum past this psychological barrier, even as gold continued its upward trend. Despite this hesitation, the near-term outlook for silver remains positive, driven by expectations that the Federal Reserve will start lowering interest rates at its September meeting. This shift is likely to direct funds towards gold and, to a lesser extent, silver, as investors seek clarity on the scale of the expected rate cuts.

Fed Policy and Economic Data

In a recent interview with Bloomberg, San Francisco Fed President Mary Daly supported a quarter- to one-percentage-point interest rate cut in September. She also indicated that a larger cut could be on the table if the labor market shows signs of weakening. As a result, this week’s US Unemployment Claims report will be closely watched, especially in light of last month’s unexpected jump in the NFP employment report, which unsettled markets.

Silver Technical Outlook and Future Demand in EVs

Silver experienced a sharp decline of $5 from its July highs, dropping about 20%, but found solid support around $26.50. The 50-day SMA (yellow) also played a role in reversing the decline, leading to a strong rally as buying interest picked up near that zone. Looking ahead, silver is expected to continue its ascent, potentially reaching $31.75, last seen on July 11, and even the $32.50 range from May. This optimism is fueled by rising demand for silver, partly due to technological advancements such as Samsung’s new solid-state battery for electric vehicles, which could use up to five grams of silver per cell.