Investors remain cautious ahead of key US economic reports, including Q3 GDP, Personal Consumption Expenditures (PCE) Price Index and Nonfarm Payrolls (NFP).
These reports are likely to provide important insights into the Federal Reserve’s policy direction, especially regarding interest rates.
Silver Market Dynamics: Supply Constraints and Global Demand
While silver prices have risen from the low $20s to a high of $32.52 in May 2023, analysts predict a 16% decline in physical silver investments this year, mainly due to weaker demand in the US and Europe.
Factors such as economic uncertainty, rising interest rates and changing investment strategies are limiting demand in these regions.
In contrast, demand from India and China remains strong, providing important support for silver. The silver market is expected to experience a significant supply shortfall of approximately 179.5 million ounces this year, underscoring ongoing supply constraints.
While this shortage reflects tight supply, short-term trading trends appear to be overshadowing these fundamentals, creating a disconnect between market conditions and investor sentiment.