Silver stalled below $60 this week even after softer US inflation, as a resilient Dollar and cautious buyers kept the metal boxed in. A structural shift in solar demand adds to a bearish near-term outlook, with a break below 55.59 opening the way toward $50.
Silver lost its recovery momentum below the $60 mark this week despite softer-than-expected US inflation, a backdrop that turned out less supportive than many investors expected. A downside surprise in CPI would normally push the Dollar lower and hand precious metals a tailwind. This time the Dollar’s decline was shallow and uneven, and buying interest in Silver stayed subdued.
The Dollar refuses to break
The Dollar Index first fell after June’s weaker CPI report, then recovered a meaningful portion of those losses after Federal Reserve Chair Kevin Warsh reaffirmed the Fed’s commitment to price stability without signalling any dovish shift in his congressional testimony. The Dollar’s weakness was also concentrated in a few currencies with their own catalysts, particularly the Canadian Dollar and the New Zealand Dollar. Against the Euro, Sterling, Swiss Franc and Yen, the move was comparatively modest.
Without a broad-based decline in the US currency, Silver has struggled to attract sustained buying. Price action suggests opportunistic buying after the inflation release was considerably weaker than in previous episodes of Dollar weakness, leaving the metal exposed if the Dollar firms or Treasury yields climb again.
Solar demand starts to shift
The structural picture is also turning. The market sits in its sixth consecutive annual supply deficit, yet higher prices do little to lift output, because around 70% of global Silver production comes as a by-product of copper, lead and zinc mining. New mine development typically requires seven to ten years, so demand does most of the balancing.
That adjustment may already be starting. China’s largest solar manufacturer, Longi Green Energy, has begun commercial production using copper-metallized solar cells, cutting reliance on Silver. Because the solar sector accounted for roughly 17% of global Silver demand last year, wider adoption could gradually weaken a key demand driver.
Technically, the outlook stays bearish while resistance at 63.25 caps the upside. A break below 55.59 would resume the decline from the record high of 121.83 toward the 76.4% retracement at 50.35, close to the $50 level.
Source: Action Forex
Trading involves risk.
Risk Disclaimer
