A new "big wave" is forming in the silver market as industrial demand continues to exceed supply, increasing expectations that silver prices may soon return to the important resistance zone around 90 USD/ounce.
While the gold market is still cautiously fluctuating due to concerns that inflation increases expectations of high interest rates, silver is receiving greater support thanks to its increasingly important role in the industrial sector.
Silver prices rose above the 88 USD/ounce mark as copper prices continued to climb to record highs. The most recent July high-quality copper contract traded around 6.70 USD/pound, up more than 2% during the day. Meanwhile, spot silver prices rose to about 88.30 USD/ounce, also up about 2%.
Mr. Elior Manier - Market analyst at OANDA said that silver currently has room to test the 90 USD/ounce zone in the context of still positive market demand.
Usually silver will follow the trend of gold, but this time the strong recovery shows that there is real buying power for alternative metals," he said.
According to analysts, demand for industrial metals such as copper remains stable, while the sharp price increase also comes from supply disruptions related to the conflict in the Middle East.
The current conflict affects the global sulfur supply chain – an important raw material in the production of basic metals. This affects copper, zinc and aluminum production, while indirectly affecting silver supply because silver is often mined as a byproduct in the production of these metals.
Experts believe that the decline in silver supply will continue to put more pressure on the market in the context that this year is forecast to be the sixth consecutive year the silver market is short of supply.
In addition, the recovery of economic activity in China continues to be an important supporting factor for silver and many other industrial metals.
Commodity experts from TD Securities said that although buying pressure from CTA funds has somewhat cooled down, the Chinese market has still recorded positive silver demand in recent times.
Major traders on the Shanghai Futures Exchange (SHFE) have continuously bought silver in the past month. Price differences in China remain high and import activity remains attractive in recent times, suggesting that demand from Asia may be supporting the upward momentum of silver," the analysis group said.
Ms. Julia Khandoshko – CEO of European brokerage firm Mind Money believes that the energy crisis related to the Iranian conflict will continue to boost demand for alternative energy, in which silver is an important metal for the renewable energy and electric vehicle industries.
Money prices are currently increasingly affected by more factors than investment sentiment, including supply restrictions, logistics disruptions, and green energy demand," she said.
Mr. David Morrison - Senior Market Analyst at Trade Nation said that although the strong USD and high interest rate expectations still put certain pressure on silver, the market's upward momentum is still very noteworthy.
According to him, if silver prices exceed the 90 USD/ounce mark, the market may turn its attention to the historical peak set in January around 120 USD/ounce.
He also said that the market is closely monitoring the meeting between President Donald Trump and Chinese President Xi Jinping in China, in the context that issues related to trade and the Middle East conflict continue to affect global investor sentiment.
