Silver prices reached new 13-year highs on Monday, climbing above $36.80 per ounce and approaching the $37 mark. This rally is driven by a combination of factors including a weakening US Dollar, expectations of Federal Reserve interest rate cuts, and hopes for improved US-China trade relations.
Investors are optimistic that these conditions will continue to push silver prices higher, marking the strongest bids since early 2012.
The US Dollar Index remains near multi-year lows, weakening the greenback and boosting silver’s appeal as an alternative asset. Market participants are also betting on potential Fed rate cuts later this year, which would further support precious metals.
Meanwhile, industrial demand for silver, especially from the tech sector and green energy industries, has been rising steadily through 2024. Despite a drop in overall global silver demand last year, investors expect this upward trend to continue.
However, upcoming US Consumer Price Index (CPI) data for May could influence this outlook. If inflation data surprises to the upside, it may delay Fed rate cuts beyond the current expectation of September.
Additionally, ongoing US-China trade talks add uncertainty. The Trump administration’s tough stance in negotiations could impact silver demand, given the metal’s heavy use in technology sectors on both sides of the Pacific.
Silver showed a strong performance last week, gaining over 9%, and is on track for further gains. Since April lows near $28, silver prices have surged almost 32%. A significant drop of around 40% would be needed to push prices below the 200-day moving average near $26.45.
In the short term, silver prices are consolidating just below a key resistance level at $36.88. A break above this could open the door for further gains, potentially reaching targets above $38. However, a pullback to support levels near $35.95 is also possible before the uptrend resumes.
Overall, silver’s outlook remains bullish amid a “perfect storm” of a weak dollar, rate cut expectations, and rising industrial demand, though inflation data and trade negotiations will be key factors to watch in the coming weeks.
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