Industrial demand drives the silver price
Despite these headwinds, silver remains supported by strong demand from the industrial metals sector, which is supported by recent stimulus measures from China. These measures are intended to stimulate economic activity and provide additional support for industrial metals such as silver. Saxo Bank noted that silver’s relative cheapness compared to gold positions it for potential gains, predicting the metal could target $40 next year. The bank’s analysis highlights silver’s dual role as a safe haven and industrial commodity, suggesting it could outperform gold in the coming months.
Silver finds support, while gold faces resistance as the dollar strengthens
While silver has found support, gold has fallen slightly after its recent rally, pressured by a stronger US dollar. The metal rose sharply earlier this week as geopolitical tensions flared in the Middle East, but traders are now awaiting further clarity on US interest rates. Kinesis Money analyst Carlo Alberto De Casa noted that while gold is under pressure in the short term, the broader environment remains supportive for the precious metal, especially if the Federal Reserve signals further interest rate cuts.
The probability of a 50 basis point cut in November currently stands at 38%, with traders awaiting the release of key data later this week, including the US non-farm wages report. A weaker-than-expected jobs report could reinforce expectations for a Fed rate cut, sending both gold and silver prices higher.
Geopolitical tensions and interest rates on government bonds in focus
Treasury yields have risen in response to geopolitical uncertainty and mixed U.S. economic data. The ISM Manufacturing PMI for September came in lower than expected at 47.2, reflecting continued economic weakness. Investors are closely watching employment data, looking for further signs of economic weakness, which could influence the Fed’s next move.
Meanwhile, rising tensions in the Middle East, especially Iran’s ballistic missile attack on Israel, have added a new layer of complexity to global markets. The possibility of a wider conflict in the oil-rich region is keeping traders on edge, with safe havens such as silver and gold likely to benefit from heightened geopolitical risks.
Market Forecast: Bullish Outlook for Silver
In the near term, silver is expected to remain supported by both industrial demand and geopolitical uncertainty. Should the conflict in the Middle East intensify and disrupt oil supplies, inflationary pressures could drive further gains for the metal. If upcoming US economic data indicate a slowdown, expectations for further Fed rate cuts could provide additional momentum. Given these factors, silver is likely to test a 12-year high and may target $33 in the coming weeks.