OCBC remains constructive on silver despite the precious metal entering a period of consolidation, as improving ETF holdings and a rebuilding of speculative positioning suggest investors are increasingly participating in the market following its recent rally.
Silver’s momentum has eased alongside gold after sharp gains earlier in the month, as sticky US inflation data prompted a modest recovery in US Treasury (UST) yields and the US dollar.
Recent core Personal Consumption Expenditures (PCE) inflation data have reinforced concerns that underlying price pressures remain persistent, contributing to a modest increase in expectations for further US Federal Reserve tightening.
Markets are currently pricing in roughly 25 basis points of additional tightening by December 2026.
The resulting recovery in US yields and the dollar has temporarily taken some momentum out of precious metals, but OCBC noted that the price pullback has coincided with stronger investment participation.
Silver and gold exchange-traded fund (ETF) holdings have increased over the past week, while managed-money positioning has also rebuilt.
OCBC said this suggests underlying conditions for precious metals have improved even as near-term price momentum pauses.
For silver specifically, OCBC sees the relatively light level of futures positioning as potentially supportive should the precious-metals rally resume.
Managed-money net positioning has increased, but futures positioning remains considerably lighter than in gold.
This leaves greater scope for fresh investor participation if the macroeconomic environment turns favourable again.
The increase in speculative positioning also appears to have been driven partly by short covering rather than aggressive accumulation of new long positions.
As a result, OCBC believes investor conviction has yet to become excessively stretched, leaving room for positioning to build further.
A renewed decline in US Treasury yields and the dollar could provide the macro catalyst required for another leg higher in silver prices.
Market attention is now focused on US Federal Reserve Chair Kevin Warsh’s keynote address at the Jackson Hole symposium on Aug 28.
OCBC said the absence of a question-and-answer session typically associated with the Fed chair’s Jackson Hole address means markets will have limited opportunity to press Warsh for a clearer signal on the September monetary policy decision.
Instead, investors are likely to scrutinise the speech for indications of the Fed’s broader policy framework.
Particular attention could fall on how Warsh assesses inflation persistence, financial conditions, the Federal Reserve’s balance sheet and the role of forward guidance.
These signals could have implications for US interest rates, the dollar, investor sentiment and, consequently, precious-metal prices.
OCBC said it remains constructive on silver, although a more convincing extension of the rally will likely require a renewed decline in both US yields and the dollar.
From a technical perspective, silver would also need to decisively break through the US$70.60 to US$72 resistance zone to strengthen the bullish setup.
Until those catalysts emerge, the precious metal could remain in consolidation as investors assess the outlook for US monetary policy and inflation.
Nevertheless, rising ETF holdings, rebuilding managed-money positions and relatively light futures positioning suggest there remains capacity for additional investment flows should the macro backdrop become more supportive.
OCBC therefore sees silver’s latest consolidation as a pause following its recent gains, with the next major directional move likely to depend on shifts in US yields, the dollar and signals from the Federal Reserve.
