Investors remain cautious ahead of significant U.S. economic reports, including Q3 GDP, the Personal Consumption Expenditures (PCE) Price Index, and Nonfarm Payrolls (NFP).
These reports are likely to offer key insights into the Federal Reserve’s policy direction, particularly concerning interest rates.
Silver Market Dynamics: Supply Constraints and Global Demand
While silver prices have risen from the low $20s to a high of $32.52 in May 2023, analysts predict a 16% drop in physical silver investment this year, primarily due to weaker demand in the U.S. and Europe.
Factors such as economic uncertainty, rising interest rates, and changing investment strategies are curbing demand in these regions.
In contrast, demand from India and China remains strong, providing a key support for silver. The silver market is expected to face a notable supply deficit of approximately 179.5 million ounces this year, underscoring ongoing supply constraints.
While this deficit reflects tight supply, short-term trading trends appear to overshadow these fundamentals, creating a disconnection between market conditions and investor sentiment.