Silver prices experienced a slight drop to $28.30 per troy ounce in the Asian trading session on Tuesday, reflecting a sense of caution among investors as they anticipate the US inflation report on Wednesday. This report will offer insights into the possibility of interest rate cuts by the Federal Reserve in September. Given that silver is a non-interest-bearing asset, any changes in interest rates could impact its price. A potential rate cut might reduce the cost of holding silver, but investors are currently adopting a wait-and-see approach. Despite the current pessimistic sentiment, the demand for silver remains strong, primarily due to its crucial role in various technologies such as solar panels and artificial intelligence (AI). The wide range of applications for the metal could help counter further price drops in the short term. Anticipated Price Increase in Silver Due to Growing Demand and Supply Limitations In 2023, the silver market encountered a substantial 15% shortage in supply, resulting in a total deficit of over 1 billion ounces from 2020 to 2024. The increasing demand is largely being driven by emerging technologies, with solar panels requiring approximately 20 grams of silver per panel and electric vehicles (EVs) utilizing between 25 and 50 grams of silver per vehicle. Moreover, silver plays a critical role in semiconductors, sensors, and AI systems. Even small devices like cell phones contain around 0.34 grams of silver, highlighting the metal’s significance in modern technology. On the production side, silver output is facing challenges due to diminishing ore grades and reserves. Over 70% of silver is obtained as a byproduct of mining other metals, with major production hubs located in Mexico, Peru, and China. To address the widening supply deficit, companies like Outcrop Silver are focusing on developing high-grade deposits, such as the Santa Ana project in Colombia, which ranks among the top-tier silver deposits globally. Emerging Medical Applications Expand the Market Potential for Silver Apart from industrial uses, silver is increasingly being adopted in the healthcare sector. A recent study from the Okinawa Institute of Science and Technology introduced silver nanoparticles that combat antibiotic-resistant bacteria by disintegrating bacterial biofilms. This medical breakthrough could further boost the demand for silver as scientists delve deeper into its antimicrobial properties. Additionally, the involvement of silver in innovative technologies like laser-induced graphene sensors for monitoring bacterial activity underscores the metal’s growing importance. Short-Term Price Projection Silver (XAG/USD) is currently trading at $28.34, down by 0.33%, encountering resistance at $29.12. The upcoming US inflation report will determine the short-term market sentiment. Technical Analysis of Silver (XAG/USD) Price Forecast Silver – Chart The current price of Silver (XAG/USD) stands at $28.34, reflecting a 0.33% decrease, and remains below key resistance levels. Immediate resistance levels are seen at $29.12, followed by $29.57 and $30.12. On the downside, the price is supported at $27.71, with subsequent levels at $27.23 and $26.74. The 50-day Exponential Moving Average (EMA) is positioned at $28.55, while the 200-day EMA slightly higher at $28.79, indicating a short-term bearish trend. Unless silver surpasses the $28.41 pivot point, bearish momentum may persist. A breakthrough above this pivot point could signal a shift in sentiment towards bullishness, but for now, a cautious approach is recommended.