Silver’s Underwhelming Performance
Silver is barely holding above the $30 level, significantly below its 11-year high of $32.52 reached in May. This lackluster response suggests silver traders may be more cautious about economic prospects and monetary policy decisions than their gold counterparts.
Factors Weighing on Silver
Several elements are contributing to silver’s underperformance:
- Concerns about industrial demand in a potential recession
- Uncertainty around the timing of U.S. interest rate cuts
- Possible overvaluation following its strong rally earlier this year
- A shift in speculative capital from silver to gold ETFs
- Softening physical demand in response to high prices
ETF Flows and Market Sentiment
While silver struggles, gold ETFs have seen renewed interest. The World Gold Council reported inflows of $0.5 billion, or 7.6 metric tons, into gold ETFs last week. This trend highlights the current preference for gold among institutional investors.
Gold’s Contrasting Rally
In contrast to silver, gold prices have reached a new record high at $2482.42. This surge comes in response to Federal Reserve Chair Jerome Powell’s recent comments, which strengthened the case for a potential September rate cut.
Market Forecast
The outlook for silver remains mixed in the short term. The metal may experience a soft third quarter due to ongoing uncertainty about U.S. monetary policy. However, there’s potential for a rally to gather pace later in the year.
Gold, on the other hand, maintains a bullish outlook in the near term, with the anticipation of upcoming U.S. rate cuts likely to drive prices higher.