The silver price is caught in a trading range after recent events soothed investors’ fears.
XAGUSD: Monthly Chart
Silver trades at $23.96, with resistance above $30. If the price gets below $20, then $18 and $13.8 are the targets.
The silver price continued to push higher this year and picked up pace with the US regional banking crisis, followed by debt ceiling tensions. With the government remaining funded beyond 2024’s election and some calm in the banking sector, precious metals demand has cooled.
However, the 2023 World Silver Survey showed that 2022 saw a record deficit in the silver market at 237.7 million ounces (7,393 tonnes). Typically, things that are positive for institutional investors, such as regional bank turmoil and weak GDP growth, will negatively impact demand for areas like industrials, jewellery, and silverware.
While retail investors were buying silver to protect their wealth from rising inflation, institutional investors turned away in favour of government bonds. Higher rates also dampened sentiment for gold and silver, as they offer no yield.
For 2023, the World Silver Survey forecasts another deficit, although lower than in 2022, at 142.1 million ounces (4,419 tonnes). Despite a recent boom in retail demand, institutional investment is expected to slow as the Federal Reserve maintains a hawkish position.
Long-term growth is still expected due to demand in areas such as EVs. “Silver is not only a precious metal but also an industrial metal,” Sankar Sharma of Risk Reward Return told CBS. “Silver is used in medical applications, solar panels, batteries, nuclear reactors, semiconductors, touch screens, and more.”
By 2025, the Silver Institute estimates that 90 million ounces of silver will be needed for vehicle production.
“It’s smart to invest if the investors have the patience to hold it for the long term,” Sharma added. “With a growing commitment to green infrastructure, clean alternative energy sources, and the anticipated growth of EVs, one should only expect the demand for silver to grow from here.”
