Bullish factors support silver
Goldman Sachs maintains a bullish view on gold, with a price target of $2,700 per ounce in early 2025. This optimism extends to silver, as both precious metals benefit from central bank demand and a weakening dollar. Additionally, increased ETF demand for gold reduces the available physical supply, further driving up the price of silver.
Geopolitical tensions add support
Recent escalations in the Middle East, with Hezbollah threatening retaliation against Israel, have raised concerns about regional stability. This geopolitical uncertainty tends to support safe assets like precious metals, potentially putting additional upward pressure on silver prices.
Economic data and Fed projections
Retail sales figures for August surprised positively on Tuesday, rising 0.1%, while a decline of 0.2% was expected. Traders will closely monitor the Fed’s economic projections and Chairman Powell’s comments after the meeting for insight into the future direction of monetary policy.
Market forecast
The outlook for silver remains bullish if the Fed implements a 50 bp rate cut and signals further easing. In this scenario, prices could rise above $32.52, the high of the year. However, a more modest cut of 25 basis points could lead to short-term profit-taking, pushing prices towards the support zone of $29.50 to $28.22. Traders should prepare for increased volatility surrounding the Fed’s announcement and upcoming economic data release.