Silver (XAG) Forecast: Rising Demand from Tech and Supply Constraints May Lift Prices

Market Overview

Silver prices (XAG/USD) slipped to $28.30 per troy ounce during Tuesday’s Asian session, reflecting cautious sentiment as investors await Wednesday’s US inflation report. The report will provide insights into the Federal Reserve’s potential interest rate cuts in September.

Since silver is a non-yielding asset, any shift in interest rates could influence its price. A potential rate cut could lower the opportunity cost of holding silver, but for now, market participants are in a wait-and-see mode.

Despite the current bearish outlook, demand for silver remains robust, driven by its essential role in technology, including solar panels and artificial intelligence (AI). The metal’s broad applications may help offset further price declines in the near term.

Rising Demand and Supply Constraints Could Lift Silver Prices

In 2023, the silver market faced a significant 15% supply deficit, marking a cumulative shortfall of over 1 billion ounces between 2020 and 2024. This growing demand is largely fueled by emerging technologies. Solar panels, for example, require around 20 grams of silver each, while electric vehicles (EVs) use between 25 and 50 grams per vehicle.

Silver is also a key component in semiconductors, sensors, and AI systems. Even cell phones contain approximately 0.34 grams of silver, highlighting the metal’s widespread importance in modern technologies.

At the same time, silver production is struggling due to declining ore grades and reserves. More than 70% of silver is produced as a byproduct of mining other metals, with major supplies concentrated in Mexico, Peru, and China.

To bridge the growing supply gap, companies like Outcrop Silver are developing high-grade deposits, such as the Santa Ana project in Colombia, which ranks among the highest-grade silver deposits globally.

New Medical Innovations Expand Silver’s Market Potential

Beyond its industrial applications, silver is finding increasing use in healthcare. A recent study from the Okinawa Institute of Science and Technology developed silver nanoparticles that combat antibiotic-resistant bacteria by breaking down bacterial biofilms.

This medical advancement could further drive silver demand, as researchers continue exploring its antimicrobial properties.

Additionally, silver’s role in new technologies, like laser-induced graphene sensors for monitoring bacterial activity, further emphasizes the metal’s expanding significance.

Short-Term Forecast

Silver (XAG/USD) is trading at $28.34, down 0.33%, facing resistance at $29.12. The upcoming US inflation report will shape the short-term outlook.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $28.34, down by 0.33% today, and remains below key resistance levels. The immediate resistance is near $29.12, followed by $29.57 and $30.12. On the downside, the price finds immediate support at $27.71, with the next levels at $27.23 and $26.74.

The 50-day EMA sits at $28.55, while the 200-day EMA is slightly higher at $28.79, indicating a short-term bearish trend. As long as silver remains below the $28.41 pivot point, the bears could stay in control.

A break above this pivot could signal a shift in sentiment and bring a bullish bias, but for now, caution is advised.