XAGUSD: The price of silver has bounced at support after a recent downturn and further gains could be ahead.
XAGUSD – Daily Chart
XAGUSD has found support at the $29.66 level which could see a rally over the next week.
Silver and gold have been sold off after reports of a ceasefire in Lebanon and the choice of investment professional Scott Bessent as U.S. Treasury Secretary. Silver suffered worse but a rebound to around $33/oz is possible according to investment bank Morgan Stanley.
Strong industrial demand from the electronics sector is another factor that could see silver outperform gold next year. Only 10% of gold is consumed by industry, while an estimated 55% of silver goes into products such as solar and photovoltaics (PVs) where demand grew by 33% last year and 64% this year. Silver has also been used in electric vehicles and semiconductors which are touted as growth sectors.
Another appeal for silver is a growing market deficit which opened five years ago and has since widened with the shortfall in fresh mine supply being met by a drawdown in above ground stocks.
Silver may be making a low here and that could be related to the tensions between Russia and western nations and could lead to a surge in the price of precious metals if there is escalation.
