On Tuesday (August 25) during Asian trading hours, spot silver fluctuated lower, currently down more than 1% to around $68 per ounce, as investors remained cautious ahead of Wednesday's release of the US July PCE data. Core PCE inflation is expected to remain stable at an annual rate of 3.4% and a monthly rate of 0.24%, still within the Fed's "target range." TD Securities noted that the July inflation data should keep the Fed's preferred indicator in line with its target for the second consecutive month, but weak retail sales point to a slowdown in consumer spending. Investors are also focused on Fed Chairman Warsh's speech at the Jackson Hole symposium on Thursday, with the market expecting Warsh to warn of upside risks to inflation but avoiding providing clear forward guidance. For silver, a non-interest-bearing asset, continued inflationary pressures could trigger concerns about interest rate hikes, limiting the upside potential of silver prices.

PCE Data Preview: Core inflation expected to remain stable at 3.4%, consumer spending shows signs of slowing.

Investors remained cautious ahead of Wednesday's release of US July PCE data, with spot silver falling over 1% to around $68 per ounce. The Fed's preferred inflation gauge—core PCE inflation—is expected to remain stable at 3.4% annually and around 0.24% monthly. TD Securities analysts noted that the July inflation data should keep the Fed's preferred gauge within its "target range" for the second consecutive month, with overall prices expected to rise by 0.15%, and the market-based core PCE monthly rate expected to remain at a modest level of 0.13%. On the consumer side, weak retail sales have pointed to a slowdown in consumer spending to 0.2% in July, with real spending growing by only 0.1%. TD Securities further predicts a gradual return to a disinflationary trend in 2027. Overall, if the data meets expectations, market pricing in the Fed's policy path may remain stable, but any unexpected upward movement could temporarily boost the dollar and suppress non-interest-bearing assets such as silver.

Jackson Hole in Focus: Warsh's Speech May Warn of Inflation Risks

The main catalyst for silver prices this week will be Federal Reserve Chairman Warsh's speech at the Jackson Hole symposium on Thursday. Warsh is known for avoiding providing forward guidance on interest rates, but the market expects him to warn of upside risks to inflation. Higher inflationary pressures could trigger market concerns about a Fed rate hike, thus putting direct pressure on silver, a non-interest-bearing asset. Against the backdrop of the ongoing US-Iran standoff and high energy prices, inflation expectations have begun to re-anchor, further limiting the upside potential for silver prices. If Warsh's rhetoric is hawkish or emphasizes inflation risks, the dollar may be supported, and silver prices may face downward pressure; if the speech is neutral, it may ease market tensions. This speech will be a key guide for the short-term direction of silver prices, and investors should be wary of volatility caused by policy signals.

Institutional Views

In a research report dated August 23, Citigroup pointed out that the continued recovery in investment demand is sufficient to offset the temporary slowdown in demand from industrial sectors such as solar energy, and structural supply shortages will continue into 2027. Inflows into physical-backed silver ETFs have accelerated again, coupled with geopolitical and fiscal easing expectations, providing support for prices. Citigroup noted that although the Federal Reserve may postpone interest rate cuts until September-December, silver prices still have upward momentum at high levels. If investor sentiment remains strong, silver is expected to break through the current level of nearly $70 and move towards higher ranges. JPMorgan Chase recently significantly lowered its silver forecast, reducing its 2026 full-year average price target to approximately $70.6/oz, with a fourth-quarter forecast of only $63, and a similar downward revision to the 2027 average price. The bank believes that the previous supply tightness in the physical market is easing, and silver prices may experience a larger correction when gold weakens, with significantly increased volatility. Long-term substitution risks such as silver-free solar energy technology are also listed as potential drags.

Summarize

Spot silver is currently down over 1% to around $68/oz, with investors remaining cautious ahead of Wednesday's US PCE data release. Core PCE inflation is expected to remain stable at 3.4% annualized, with TD Securities noting that July's inflation data should keep the Fed's preferred indicator within its target range for the second consecutive month. Weak retail sales suggest a slowdown in consumer spending. The market is focused on Fed Chairman Warsh's speech at Friday's Jackson Hole conference, which may warn of upside risks to inflation. Ahead of the PCE data and the Jackson Hole speech, silver is expected to maintain a weak and volatile pattern, with $67.00 being a key support level. (Spot silver daily chart, source: EasyTrade) At 14:05 Beijing time on August 25, spot silver was trading at $68.08 per ounce.