The Federal Reserve rate cuts the demand for precious metals
Speculation around the imminent federal reserve tariffs (FED) has provided a significant tail wind for silver, with dovish comments from the president of the Fed of San Francisco, Mary Daly, reinforcing market expectations. The lowest interest rates perspective makes assets that do not function as silver more attractive to investors looking for cash alternatives and bonds.
Bond futures markets have a price at approximately 90% probability of a rate reduction at the Fed meeting in September, a development that has already begun to remodel the positioning of precious metals. The lowest rates reduce the opportunity cost of maintaining assets that do not pay interest, which makes silver and gold more attractive in relation to performance alternatives.
Dovish’s change occurs as the labor market data continues to soften, with the slowdown in non -agricultural payroll and unemployment gradually increase higher. This combination of factors is creating the perfect storm for precious metals, with silver for both its attractive safe and improving the relative attraction.
Investors are increasingly betting that the next movement of the Fed will be towards accommodation instead of greater adjustment. This monetary policy pivot represents a fundamental change that could maintain a demand for precious metals far beyond the initial announcement of rate cut.
The weakness of the dollar amplifies Silver’s attraction worldwide
The recent softening of the US dollar has provided another crucial catalyst for Silver’s advance, which makes precious metal more affordable for international buyers. A weakest dollar generally translates into prices of higher basic products, since they have a predominantly price in Greenback.
This monetary dynamic creates a self-reforzation cycle in which the weakness of the dollar leads to higher silver prices, which in turn attracts more investment flows to the metal. The relationship between the dollar and precious metals remains one of the most reliable commercial relations in financial markets.
International demand has collected significantly as silver becomes more accessible to buyers who use other currencies. This global rally dimension suggests that the measure has broader bases than the monetary policy expectations of the purely domestic United States.
The supply deficit creates structural support at higher prices
La Plata faces a deeper supply demand imbalance that provides fundamental support for higher prices beyond the current rally promoted by monetary policy. Industry analysts estimate that 2024 will see the supply of demand exceeded in approximately 148 million ounces, creating a structural deficit.
This supply deficit is not expected to resolve rapidly, with projections that suggest that the deficit will persist in 2025. Such persistent imbalances generally create sustained upward pressure on prices, particularly when combined with other support factors such as the flexibility of monetary policy.
The mining supply has fought to maintain the rhythm of the growing demand, particularly as mineral qualifications decrease and extraction costs increase. Environmental and regulatory challenges in the key producing regions have further limited the new market supply.
The combination of a new limited supply and a growing industrial demand creates a higher prices base that extend beyond short -term commercial factors. This structural element gives Silver Bulls the confidence that the current rally has more space to run.
Industrial demand transforms Silver’s investment profile
Silver’s growing paper as an industrial metal has fundamentally changed its investment characteristics, going beyond its traditional classification of precious metals. The growing use of metal in solar panels, electronics and electric vehicles (EV) has created new demand currents that are less sensitive to the feeling of the financial market.
Renewable energy infrastructure requires significant silver content, with the manufacture of solar panels that represents one of the fastest growing industrial demand sources. As governments around the world accelerate green energy transitions, this demand component is expected to continue to expand substantially.
The appetite of the technological sector for La Plata has increased together with the developments in artificial intelligence (AI) and advanced electronics. These high -tech applications often require Silver’s unique conductive properties, creating a demand closely linked to technological advance instead of traditional investment flows.
This dual nature as precious and industrial metal makes money particularly sensitive to economic growth expectations. Strong industrial demand can support prices even when traditional secure refuge flows decrease, providing a more solid basis for sustained price appreciation.
Market volatility creates commercial opportunities and risks
The smallest market size of Silver compared to gold makes it inherently more volatile, with changes in prices often amplified by reduced liquidity. This feature has earned him the nickname of “The Devil’s Metal” among merchants, which reflects both their potential for dramatic gains and equally acute reversions.
Recent trade sessions affected by vacations have shown how reduced liquidity can increase price movements in silver markets. The lowest participation volumes mean that individual operations can have higher impacts on price discovery, creating opportunities for agile merchants.
The basic products requires understanding these liquidity dynamics, particularly around the important economic liberations and holiday periods. The successful silver trade often implies time and exits around these periods of high volatility.
Metal response ability to speculative flows means that feeling can change rapidly, which requires merchants to remain alert to change market dynamics. The technical analysis becomes particularly valuable to identify the key levels of support and resistance that can guide commercial decisions during volatile periods.
Technical Silver Price Analysis
Silver has enjoyed an impressive race since April, but this is only the last highest stage in a race that has seen the price of the price from the minimum of 2022. The last maximum of several years confirms the upward trend, and those who accepted weakness at the end of July have been the last beneficiaries of the demonstration.
In the short term, however, the price could face consolidation; The previous clear manifestations have been followed by weakness, and September is the second most skilled month for silver in the last 25 years, as shown below:
Silver seasonality
Bulls will be encouraged by minimums higher than $ 37.15 and $ 36.25, which can provide support in case of backward.
