Silver may reach record highs as supply is reaching record lows

Precious metals are on the rise

The price of silver, sometimes overlooked in favor of gold, has lately risen to around $26 an ounce, its highest level in over a year. Gold’s 9% increase, platinum’s 10% increase, and palladium’s 12% increase all pale in comparison to silver’s over 20% increase during the last month.

In contrast, the price of the US dollar, another safe-haven asset, has collapsed, declining by more than 9% from its 20-year peak in September, and by around 2% during the previous month. After investors fled to the safety of bullion from the sheer volatility caused by S&P 500 businesses’ poor reports, the white metal saw a surge in demand.

More to read: AUD/USD dives as RBA could ease off the hiking

Demand for US Treasury bonds and bullions has skyrocketed on rising worries of economic slowdown following bad results and disappointing sales projections from S&P 500 businesses. Bullion and US government bonds were supported as a safe haven due to fresh banking worries mostly led by the announcement of quarterly results from First Republic Bank.

Silver may rise due to Fed and demand

As markets continue to price in US rate reduction later this year, the rates on the 2 and 10 year US Treasuries that are keenly tracked fell sharply Wednesday. Yields on 10-year US Treasuries have plummeted to 3.40%.

If Fed raises rates by 25 basis points at the FOMC meeting next week, the Fed is widely predicted to pause before beginning a rate decrease in the third quarter. Silver prices might keep rising due to this fact.

You may also like: EUR/GBP pushes toward major resistance – will bulls break it?

Analysts have long warned of a “severe shortage” of silver due to its increasing importance in several industrial sectors, including the automobile and electronics industries. The updated statistics provide further context. Since 2020, worldwide silver demand has climbed by 38%, according to data from the Silver Institute.

According to the Silver Institute’s most recent report, silver demand increased by 18% to a record high of 1.24 billion ounces last year, while supply remained flat. This has prolonged the market deficit for a second year running. By the institute’s estimates, silver was undersupplied by 237.7 million ounces.

Silver has moved comfortably over the key barrier of $25.00

The silver bears are in action as bulls are cashing in recent highs. The price is moving closer and closer to the 26$ area, where bulls close their positions.

The next support is around $25, where bulls will go to war again, as this is a critical level for the white metal. In case this support is broken, it will act as a new key resistance for silver.

Silver 1D chart, source: tradingview.com, author’s analysis