A hotter than expected inflation print can reinforce the cautious attitude of the Fed, which pushes the yields and the dollar higher while putting silver under pressure. On the other hand, a weaker reading can increase the betting on the speed, making silver more attractive.
Where do the FED rate go the opportunities?
Markets currently praise in a probability of 70% of a first FED rate reduction in June, with little chance of a relocation in March. Powell’s testimony for the congress on Wednesday and Thursday will be critical. If he is worried about slowing down the growth or stricter credit conditions, markets can shift expectations to an earlier rate reduction, which would probably support silver. However, if Powell maintains a cautious tone, silver could be confronted with constant pressure from sturdy treasury yields and a strong dollar.
Will the industrial demand and trade policy support silver?
Silver’s long-term support comes from its industrial applications, in particular in solar energy, electronics and medical technology. With the production of solar panel for 10% of the global silver demand, the expansion of renewable energy remains a bullish factor.
Geopolitical risks can also play a role. The trade conflict in the US remains unsolved, with China taking revenge on new American rates by imposing a duty of 15% on liquid natural gas and other American exports. Although silver is not directly influenced, rising trade stresses can stimulate the demand for safe haven if global economic uncertainty increases.
Market forecast: The basic principles remain supportive, but FED policy is the key
Silver’s short -term direction depends on the inflation data, Powell’s testimony and the expectations of the shift. If CPI and PPI show that inflation cools down, silver can regain momentum if speed possesses reinforce bets. If inflation remains stubborn or Powell strengthens a cautious position, silver can be confronted with further headwind of rising yields and a stronger dollar.
Longer term, industrial demand and safe port flows remain important drivers. However, until there is a clearer signal about monetary policy, silver can consolidate while the market is waiting for its next large catalyst.