On Wednesday (August 19) during Asian trading hours, spot silver prices continued their decline, currently trading around $62.8 per ounce, down approximately 0.8% on the day. Continued energy supply disruptions fueled inflation concerns, causing global inflation expectations to decouple and reigniting market anxieties about further interest rate hikes by major central banks, thus diminishing the attractiveness of non-interest-bearing assets like silver. US crude oil futures for September delivery briefly touched a three-week high near $86 per barrel, and Trump's confirmation that there were no negotiations or dialogue arrangements with Iran suggests that energy risks are unlikely to subside in the short term. The market is focused on the minutes of the Federal Reserve's July meeting, but Chairman Warsh insisted on not providing forward guidance on policy rates, meaning the minutes may not offer a clear signal on the interest rate path.

Energy risks continue to escalate, and inflation concerns are weighing on silver prices.

Silver prices extended Tuesday's decline on Wednesday, trading around $62.8 per ounce. High oil prices are reshaping global inflation expectations—US crude oil futures for September delivery touched a two-week high of around $86 per barrel. The continued rise in energy prices has fueled market concerns about further interest rate hikes by global central banks, directly suppressing non-interest-bearing assets like silver. The risk of disruptions to US energy supplies seems unlikely to be resolved in the short term. Trump has confirmed that "there are no negotiations or dialogue arrangements with Iran," meaning that shipping risks in the Strait of Hormuz will persist, and the geopolitical premium on energy prices is unlikely to subside. High oil prices not only directly push up inflation but also influence the policy paths of global central banks through the channel of "inflation expectation de-anchoring."

The FOMC minutes are in focus, but forward guidance remains absent.

The market is turning its attention to the minutes of the Federal Reserve's July meeting. The minutes will be released on Wednesday, but investors should not expect clear clues about the interest rate outlook – Fed Chairman Warsh's insistence on not providing forward guidance on policy rates means the discussions in the minutes may not offer the directional signals the market is hoping for. Current market pricing indicates that the Fed will keep rates unchanged at its September meeting. The CME FedWatch tool shows a near 65% probability of no change in September. The minutes may trigger short-term volatility by revealing the degree of disagreement within the committee, but are unlikely to provide the market with clear guidance on the policy path.

Institutional Views

Citigroup analysts reiterated their optimistic stance on silver in mid-August, maintaining their 0-3 month target price of $75/oz and their 6-12 month target price of $90/oz. With spot silver currently around $63, this implies approximately 40% upside potential in the medium term. The bank believes that while industrial demand is weak due to reduced solar power output and alternative technologies, investment demand will gradually take over. A de-escalation in the Strait of Hormuz and a less hawkish stance from the Federal Reserve would significantly boost investor risk appetite, potentially amplifying silver's gains as a high-beta commodity. India's physical premium of approximately 7% also provides additional support, and demand is expected to recover further during the fourth quarter's festival and wedding season. The market still anticipates a supply gap until at least 2027, with structural demand from artificial intelligence, 5G, and electric vehicles partially offsetting the weakness in solar power. JPMorgan Chase's latest research report significantly lowered its average silver price forecast for the remainder of 2026 to a range of $60-65 per ounce, with an annual average of approximately $70 and a fourth-quarter average of approximately $63. The report also projects an average price of approximately $63.9 in 2027. Previously, the target had been as high as $81-85. The downward revision is primarily due to a potential nearly 30% year-on-year decrease in demand for solar-grade silver (approximately 60 million ounces), coupled with higher yields, a stronger dollar, and weakened investor demand. Strategist Gregory Shearer pointed out that silver-free solar technology is the biggest long-term risk. Although a global supply gap persists, it has narrowed significantly, and the gold-silver ratio is expected to return to 70-75. A rate hike by the Federal Reserve before the end of the year would further suppress the attractiveness of precious metals. JPMorgan Chase believes that silver will follow gold's direction in the short term, but its upside potential is limited. It needs to wait for new buyers to enter the market and for speculative positions to be corrected before it can break out of its low-level consolidation.

Summarize

Silver prices fell to around $63.00 per ounce, as inflation concerns stemming from energy supply risks continued to suppress the attractiveness of non-interest-bearing assets. Trump confirmed there were no negotiations with Iran, and the risk in the Strait of Hormuz is unlikely to subside in the short term, keeping oil prices high. The market is focused on the FOMC minutes, but the lack of forward guidance means the minutes may not provide clear policy signals. Until energy risks and monetary policy expectations become clearer, silver is expected to maintain a weak and volatile pattern in the short term. (Spot silver daily chart, source: EasyTrade) At 14:32 Beijing time on August 19, spot silver was trading at $62.77 per ounce.