Silver’s strong upward move this week was largely supported by gold’s record performance. When gold crossed the $2,700 per ounce threshold, silver followed suit, reflecting the metals’ historically close correlation. Geopolitical tensions, especially in the Middle East, played a major role in this rally as investors sought safe-haven assets. The conflict between Israel and Hezbollah escalated, with both sides vowing to continue fighting, raising fears of broader regional instability. This drove investors into both gold and silver as they hedged against risk.
Stimulus hope strengthens Silver’s upside
In addition to geopolitical risks, the silver market also found support in expectations of further monetary stimulus from China. As China’s economic growth slowed to its weakest pace this year, expectations grew that the government would implement more aggressive measures to stabilize the economy. This speculation stimulated industrial demand for silver, as the metal plays an important role in production and technology. However, despite the promise of Chinese stimulus, concerns about structural problems in the real estate sector dampened some of the optimism.
The interest on US dollars and government bonds offers resistance
Silver’s rally faced headwinds from a strong U.S. dollar and resilient U.S. Treasury yields, which continued to hover near multi-month highs. A stronger dollar tends to weigh on silver, making it more expensive for foreign buyers, while higher Treasury yields reduce the appeal of non-yielding assets like precious metals. Nevertheless, silver managed to maintain its upward momentum, supported by risk aversion and expectations of US interest rate cuts.
Market Forecast: More Profits Ahead?
Looking ahead, silver appears poised to break its multi-year high of $35.40. However, the market remains sensitive to global risk sentiment. Continued geopolitical instability and the possibility of looser monetary policy could fuel further gains, while a stronger dollar and higher government bond yields could limit upside potential. Traders will keep a close eye on key resistance levels and any developments from China and the US Federal Reserve for additional clues.
The outlook for silver is cautiously bullish, with a strong likelihood of further gains if these factors align favorably.