Silver Daily Price Analysis – XAG/USD Slips Amid Rising Yields

Increased U.S. yields raise the opportunity cost of holding silver, making it less attractive for investors.

Key Points

• Silver trades at $31.50, pressured by rising U.S. yields and a strong dollar.
• The U.S. dollar’s strength lowers silver demand from foreign buyers.
• China’s economic stimulus could boost silver demand.

Silver Daily Price Analysis – 08/11/2024

Silver prices have continued to experience downward pressure, trading around $31.50 per ounce as of this morning. This decline follows a 1.67% gain from Thursday’s close but is overshadowed by today’s 0.80% drop from the open, reflecting a notable lack of momentum. Silver’s decline aligns with rising U.S. Treasury yields, where the 2-year and 10-year yields are now at 4.20% and 4.33%, respectively.

The increase in yields intensifies the opportunity cost of holding non-yielding assets like silver, which often causes investors to shift toward higher-yielding investments. Furthermore, the recent strengthening of the U.S. dollar has placed additional pressure on silver. 

The U.S. Dollar Index rose to approximately 104.50, supported by robust U.S. economic data and the recent Federal Reserve rate cut of 25 basis points, setting the benchmark range at 4.50%-4.75%. This appreciation in the dollar has made silver more expensive for non-U.S. buyers, contributing to reduced demand.

Industrial Demand and Long-Term Outlook

Despite short-term headwinds, analysts suggest silver’s long-term prospects are more favorable due to its diverse industrial applications. Silver’s unique properties make it essential in various sectors, including electronics, solar technology, and medical devices. The metal’s role in renewable energy, particularly in solar panels, offers significant growth potential as global efforts toward green energy accelerate.

Analysts predict that silver could reach $36 to $38 per ounce by 2025, and some bullish projections even suggest it may hit $50 by 2025, with potential to climb as high as $77 by 2028. As the world transitions towards a greener economy, silver’s industrial demand is likely to keep rising, potentially outperforming gold over the next few years due to this specific demand dynamic.

China’s Economic Stimulus and Impact on Silver

China’s potential stimulus measures are another significant factor that could support silver demand in the coming months. With reports suggesting a stimulus package exceeding 10 trillion yuan, China’s continued economic support could lead to increased demand for silver due to its widespread use in electronics and renewable energy applications.

China’s October trade surplus reached $95.27 billion, with exports surging 12.7% year-over-year. This growth signals China’s resilience and the likely boost in silver demand as the country ramps up its industrial activities. For the silver market, these developments could counterbalance some of the bearish factors in the short term, while also reinforcing silver’s potential as a crucial component of China’s industrial growth in the long run.

Key Economic Data and News to Be Released Today

Today’s economic calendar does not feature any major data releases that are expected to significantly impact silver prices. However, traders should monitor any unexpected developments in U.S. economic indicators or shifts in Treasury yields, as these could influence silver’s attractiveness as a non-yielding asset.

Visit our Economic Calendar

Silver Technical Analysis – 08/11/2024

From the higher timeframe, Silver has completely changed momentum into a bearish bias. For instance, looking at the price action on the 4-hour timeframe, the metal has broken below the rising channel, retesting the lower trendline to start a confirmed bearish movement.

Similarly, on the 15-minute timeframe, silver has broken below a key level, we are expecting a slight retest of the key level before a huge price movement to the downside.

Also, Silver has crossed below the intraday 200 EMa, further confirming the bearish price movement.

Silver Fibonacci Key Price Levels 08/11/2024

Short-term traders planning to trade XAG/USD today should keep a close eye on the following key price levels for the day: