Silver Price News: Silver Suffers Growth Jitters

Silver ended last week on a sour note, closing at a three-week low below $28/toz. While the most recent US Non-Farm Payroll print is somewhat problematic for gold, it is far more of a headache for silver. Not only does it exacerbate growth and inflation concerns, it also, as explained in today’s Gold Forecast, is also thought to increase the chance of a Fed policy error and by extension the risk of an economic ‘hard landing’. It is not coincidental that the S&P 500 has just seen its steepest weekly decline since March 2023. Silver starts this week trading around $27.8/toz.

While much market attention will inevitably focus on what the Fed delivers on 18 September – CME FedWatch suggests that futures markets are now pricing in just a 29% chance of a 0.5% cut and a 71% chance of a 0.25% cut – longer-term growth prospects are more important for silver. Thus, we would argue that the Fed’s new Summary of Economic Projections also published that day are more consequential than the rate moves alone.

The most recent CFTC Commitments of Traders (CoT) report published late on Friday indicates that silver speculators cut back their net long futures positions over the previous week. These now lie c.25% below the 53-month high recorded in July and at the second-lowest level since mid-March. current levels constitute the lowest net long since late March. Conversely physical silver ETFs/ETCs appear to have seen net inflows over the last week, perhaps suggesting some bargain-hunting on the part of retail investors.

Looking to the silver chart, Friday’s decline confirmed silver’s inability to negotiate major horizontal resistance at $28.90/toz and close took it below both the flattening 20-day Simple Moving Average at $28.85/toz and minor ascending oblique support (now likely resistance) at $28.56/toz. The next clear major line of support is an ascending oblique, currently at $27.26/toz and below that major horizontal support at $26.20/toz. Momentum remains weak.

It’s a slow start to the events calendar this week, although August China trade data and European Commission Summer Economic Forecasts both on 10 September should be of interest to silver investors.