Silver Price Forecast: Rate Pressure Keeps $64–$68 Range Intact

Silver Technical Analysis

The silver market is down just a bit in early trading on Monday, but keep in mind, it is going to be thin trading on Monday. It is Labor Day in the United States, and the futures market will close early as a result.

The consolidation that we’ve seen recently between $64 and $68 remains in the futures market, but today’s pressure is keeping it in the lower half of the range. This could continue to be the case, as rates remain a bit stubborn. Watching the yields will be a big help in this environment.

Dominant Driver Is Higher US Rate Expectations

Following the Friday jobs number that was much stronger than anticipated, rising 162,000 versus the 56,000 expected. This is pushing the market implied rate hike probability of a September Fed hike to about 60%. That lifts yields, which creates a headwind for silver most of the time.

Yielding metals and assets in general will shy away from that. Right now, it does have the longer-term industrial supply argument underneath it, keeping it somewhat firm. And I personally do believe that silver will continue to be in demand over the next several years.

The supply just isn’t growing quickly enough to meet demand, but that doesn’t do a lot for short term price.

The higher oil prices could keep energy inflation elevated, and that is part of what’s going on with interest rates around the world. So with that, it’s a scenario where interest rates remain elevated, and silver remains somewhat compressed.

We’re hanging around the 50-day and 200-day EMAs, which typically causes some noise for short-term hiccups anyways, so marry that with the fact that it’s a holiday. It’s pretty neutral at the moment.

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