The surge in silver prices can be attributed to a significant gap between supply and demand, with demand surpassing supply for the fifth consecutive year. The industrial demand for silver has played a crucial role in driving this trend, now accounting for 64% of the global silver demand. This shift in demand dynamics is primarily fueled by the green energy sector, artificial intelligence (AI), and electric vehicles (EVs), which are experiencing rapid growth worldwide.
Potential Factors affecting Silver Prices
Despite the bullish trend in silver prices, there are potential factors that could dampen this momentum. A potential slowdown in China’s economy and the impact of prolonged high interest rates are two key concerns. A decrease in demand from China could help balance the supply and demand gap, while higher interest rates from Central Banks could potentially lower silver prices. The upcoming US CPI data also has the potential to influence silver prices, depending on the inflation print.
Technical Analysis and Future Outlook
From a technical standpoint, silver broke out of a bullish pennant pattern on the daily chart, leading to a rally before entering a consolidation phase. The formation of lower highs and higher lows indicates a new bullish pennant pattern, signaling further upside potential. Additionally, the moving averages suggest a bullish momentum, with the 100-day MA nearing a golden cross with the 200-day MA. However, a close below the 30.600 level could invalidate the current bullish setup.
The rise in silver prices is driven by a supply and demand gap, with industrial demand being a significant contributor. While factors like a slowdown in China’s economy and high interest rates could impact silver prices, the technical analysis indicates a bullish trend with potential for further upside. Investors and traders should carefully monitor these factors to make informed decisions regarding silver investments.