Silver Rises Over 5%: Testing $67 Resistance

Silver prices surged significantly on August 19th, reaching $66.98 per ounce, gaining 5.79% during the day. This move was driven by a sharp drop in bond yields following the US Treasury Department's decision to expand its long-term bond repurchase program. A strong buying wave swept across precious metals, including gold, pushing silver to its highest level in two months.

The underlying mechanism is quite clear. The US Treasury Department announced it would increase the maximum repurchase amount for 10-20 year and 20-30 year bonds from $2 billion per transaction to at least $4 billion. This move pushed long-term yields down from their highest levels in 19 years, making non-interest-bearing assets like silver more attractive. Simultaneously, the weakening dollar index also supported the price per ounce.

The technical outlook for silver points to a critical threshold. XAG/USD is testing the upper end of its consolidation range between $62 and $66.50, with $67 currently emerging as the nearest resistance. A daily close above this level could target $68.57 (100-day moving average) and $71.88 (200-day moving average), respectively. The RSI remaining in positive territory above 60 indicates that buyers are in control.

However, there's another side to the picture. Rising oil prices, combined with geopolitical risks, are reigniting inflation concerns. The lack of a diplomatic solution between the US and Iran, and uncertainty in the Strait of Hormuz, are putting upward pressure on energy prices. Energy-related inflation could push central banks to pursue tighter policies for longer, a negative scenario for silver. Markets are currently pricing in a 35% probability of a Fed rate hike in September, compared to 47% a month ago.

Long-term structural factors continue to support silver. The Silver Institute expects the silver market to experience its sixth consecutive annual supply deficit this year, at approximately 46-50 million ounces. While mining production is projected to decline by 0.3% in 2026, a 7% increase in recycling supply does not appear sufficient to close the gap. The solar energy sector accounts for approximately 30% of silver demand, and although producers are trying to reduce production by every gram to lower costs, scaling up substitute materials is time-consuming. The infrastructure needs of AI data centers may also add another dimension to demand in the coming period.

For Gate users, silver offers dual volatility as both a precious metal and an industrial commodity. At this level, where the $67 resistance is being tested, the Fed meeting minutes to be released tomorrow and the Jackson Hole meeting on August 26th will be critical in determining the short-term direction. If the price fails to hold above the resistance level, support levels at $63.50 and $62.50 may come into play, while a break above $67 could target the $70-72 range.

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