Silver Prices Drop Amid Inflation Fears as Citi Forecasts Rebound
Silver prices have dropped as US Treasury yields rise amid inflation and Fed outlook concerns. The US PCE price index rose 0.2% in July, above expectations of 0.1%, with annual inflation accelerating to 3.7% against forecasts of 3.6%. In contrast, total demand for silver is expected to decline by 2%.
Citi maintains its bullish outlook on silver, forecasting it at $75 per ounce over the next three months and potentially reaching $90 over six to 12 months. This forecast is supported by stronger investment demand, easing geopolitical tensions, and expectations of a less hawkish Federal Reserve.
The global silver market is expected to remain in structural deficit for a sixth consecutive year, with stocks drawn down by 762 million troy ounces since 2021. Despite total supply falling by 2%, industrial fabrication is expected to decline by 3%, while coin and bar demand could rise by 18%.
Technically, the market is under short covering, with open interest declining 13.82% to 6,445 while prices gained ₹1,013, indicating buying support amid reduced positions.