Dollar weakness pushes safe-haven buying, Gold and Silver rise on August 5, Silver supply shortage becomes the focus

August 5, 2026, the global precious metals market welcomed a new uptrend after a dramatic shake-up triggered by US agricultural data last week. As of the Asian session close, spot gold is trading at $2,558 per ounce, up 0.8% during the day, firmly holding the $2,550 key psychological level. Spot silver is performing even stronger, at $45.8 per ounce, up 1.5%, setting a new multi-year high. Market participants point out that the decline in the dollar index, the lowering of US Treasury yields, and the continued tightening of supply and demand fundamentals for silver are the core drivers of this rally. ## Weak US Economic Data and Rising Rate Cut Expectations The latest US July ISM Services Index unexpectedly dropped to 48.7, well below market expectations of 51.2, and broke below the death line, indicating a sharp slowdown in the services sector. Following this data release, the dollar index rapidly fell 0.3% to near 103.5, reaching a two-month low. Simultaneously, the US 10-year Treasury yield fell to 4.08%, causing the market price for a September Fed rate cut to jump instantly to 85%. Safe-haven assets gained strong buying interest. Gold, as a traditional tool for hedging against economic slowdown and monetary easing, attracted a large influx of funds. According to Bloomberg data, the largest gold ETF, SPDR Gold Trust (GLD), saw net inflows exceeding $870 million in the early trading session, marking the third consecutive day of inflows, indicating that institutional investors are actively replenishing their gold holdings. ## Silver Industrial Demand Explosion Expands Supply Shortage as Main Logic Silver's rally is even stronger today, briefly touching $46.1 per ounce, just one step away from a historical high. Unlike gold, which is primarily driven by safe-haven sentiment, silver's strength comes more from structural changes in physical supply and demand. According to the latest forecast released by the Silver Institute last month, the global silver supply deficit will expand to 138 million ounces, marking the fourth consecutive year of record highs. Despite modest growth in mine production, the explosive growth in industrial demand for solar photovoltaics, 5G communications, electric vehicles, and AI server heat dissipation modules is causing rapid consumption of silver inventories. Data shows that as of the end of July, the silver inventory in the London vaults has dropped to 28,500 tons, down 12% from the beginning of the year, reaching a ten-year low. In terms of short-term catalysts, the peak demand season for jewelry ahead of the Indian Diwali and Mid-Autumn Festival in China is approaching, providing additional support for silver prices through physical buying. Analysts believe that until the supply shortage is alleviated, silver's price elasticity will remain greater than that of gold, as the gold-silver ratio has sharply compressed from 82 at the beginning of the year to the current level near 55, indicating that silver is in a strong rally phase. ## Thai Market Benefits Simultaneously, Thai Baht Appreciation Adds a Variable In the Southeast Asian market, the latest domestic gold price announced by the Thai Association of Gold Traders today is 2,480 Thai Baht per gram, up 1.2% from last Friday, and setting a new historical high. Notably, the Thai Baht has appreciated due to the weakening dollar, with the dollar-to-baht exchange rate falling to 36.2. Although this slightly suppressed the rise in the local gold price, it did not prevent investors from entering the market. Gold shops line up in long queues in Manhattan, with many citizens profiting from selling gold bars. According to the Precious Metals Traders Association of Thailand, gold recycling reached 32 tons in the first half of this year, setting a new historical high for the same period, reflecting that rising gold prices are stimulating the accelerated circulation of gold among the public. For long-term investors, if the Thai baht continues to appreciate, it may erode gold returns, requiring consideration of exchange rate risk assessment. ## Technicals favor bulls, but beware of short-term correction risks From technical indicator observations, gold is currently above all major moving averages, and the MACD momentum histogram is expanding above the zero line, indicating a bullish pattern has not broken. Short-term support is at $2,540; a break below this could test the $2,500 level; look for $2,570 for upside, and a breakthrough could aim for the $2,600 round number. Silver shows a strong bullish arrangement, with the 5-day moving average crossing above the 20-day moving average. Short-term support is at $45.2, and resistance is at $46.5. However, volatility indicators have entered overbought territory, coupled with the potential fluctuations from the US July Producer Price Index (PPI) to be released this week, caution is advised regarding the risk of sharp price swings for those chasing higher. ## Analyst View: Gold Bull Market Structure is Solid, Silver Has More Long-Term Potential Several investment banks maintain optimistic outlooks for precious metals in their latest reports. The Commodity Trading team at Goldman Sachs stated that the trend of central bank de-dollarization remains unchanged, and the Fed's shift towards easing is inevitable; gold prices are projected to reach $2,700 by year-end. JPMorgan specifically highlighted silver, believing that industrial demand from AI and new energy industries will be the most important price driver for silver over the next decade, predicting that the average price of silver will break $50 by 2027. However, some analysts caution that the market already prices in rate cuts, if hawkish signals are released by Fed officials, or if US inflation data unexpectedly rises, short-term gold and silver prices could see rapid profit reversals. Investors are advised to adopt a phased allocation strategy and utilize gold ETFs or futures tools for risk management to flexibly respond to market changes. Overall, the gold market on August 5th once again demonstrated its allure amidst macroeconomic uncertainty and supply-demand imbalance. Whether it is safe-haven funds chasing gold or silver dancing with the wind under the pressure of industrial giants, reminds us: the gold market at this moment is a bullish gold era where risk and opportunity coexist. Investors should closely monitor US inflation data and Fed official actions, and closely track silver inventory changes, anchoring the trend and moving steadily before the next storm arrives.