GOLD AFTER JACKSON HOLE


Silver’s recent performance

Silver has started this week on a positive note. Even though rising real interest rates are not good for metals right now, silver has been doing well recently. It’s gained about 5% in a short time after dropping for five weeks in a row. This run-up might continue if the demand from industries stays steady.

 


The connection between silver and the economy

Silver doesn’t do well when the US dollar gets stronger and when interest rates rise. This is because silver doesn’t generate passive income like other investments. People might choose other options that give them more returns.

 

However, in the long term, the demand for silver is expected to grow. This is because of the growing use of renewable energy, especially in things like solar panels. Silver is used in these panels, so its demand is going up. But there’s limited supply, which can also drive its price up.

 

By 2025, more than half of the global demand for silver is predicted to come from the renewable energy industry. The demand for silver is going up, but the supply is not keeping up. This is creating a situation where there’s not enough silver, which can lead to higher prices. Right now, silver’s price is moving up strongly and might reach around $25.50 per ounce.

 

Factors affecting silver’s future

Silver’s recent performance hasn’t been great, but it’s starting to improve. It has gained around 5% since August 18. This improvement happened because silver’s price hit certain levels that indicate support, stopping it from falling further.

 

The relationship between the US dollar and silver is interesting. While a stronger dollar usually means lower prices for commodities like silver, this doesn’t always apply to silver because it’s used in industries. When industries are doing well, silver tends to do well too.

 

Silver’s future might also depend on the health of the US economy and the strength of the dollar. The Federal Reserve Chair, Jerome Powell, will speak soon, and his words might affect the economy and the dollar’s strength. Currently, most traders think the Fed won’t raise interest rates at the next meeting.

 

Concerns about China

China’s economy is not doing well, and this could affect silver too. China is a big user of silver in industries like making solar panels. If China’s economy keeps struggling, it might use less silver, which can bring silver’s price down.

 

Silver’s possible paths

The situation with silver is complex, but here are two possible scenarios:

Scenario 1: Stronger Dollar and Silver

If the Dollar Index stays strong (above 104) and the spot price of silver moves up, then price of silver is strong only due to firm demand.

 Scenario 2: Weaker Dollar and Silver

If the Dollar Index falls below 103 and the spot price of silver moves up, then the price of silver is strong due to firm demand as well as liquidity.

 

Remember, these scenarios depend on many factors, so it’s important to stay updated with the latest information before making any decisions related to silver. Despite the current economic conditions not being great, the value of gold and silver is still relatively high. So, in the long term, like maybe in the second half of 2024, when the Fed changes its approach, there could be good times in store for gold and silver.

  

For more insights and analysis, visit Uptrendpicks.com

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