Silver Market Outlook 2024: Comprehensive Analysis and Future Price Predictions

On 30 January 2024, we analysed the main trends in the silver (XAG/USD) market. We examined factors influencing the precious metal’s price, conducted a technical analysis of its price chart, and uncovered expert opinions on the outlook for silver prices in 2024.

Introduction to the silver market

According to American Bullion experts, silver is the second most popular precious metal for commodity investing, second only to gold. The Silver Institute’s forecasts suggest that the total demand for this metal in the global market might have reached 1.14 billion ounces in 2023, accompanied by a mine production of 820 million and a deficit of 140 million. This reflects a 10%, 2%, and 45% decrease compared to the 2022 statistics, respectively.

As per the Silver Institute, the worldwide demand for silver may reach a record level of 1.2 billion ounces in 2024. Concurrently, mine production is expected to rise to 843 million ounces, marking the highest level since 2018, with a projected deficit of 176 million ounces. Compared to the 2023 figures, the first two indicators may increase by 1% and 4%, respectively, while the third may decrease by 9%.

Throughout the analysis, we recommend keeping the Silver Institute’s forecasts for 2023 and 2024 in mind, as they will serve as reference points.

Factors influencing silver prices

Interest rate reduction

In 2023, the inflation rate in the US started to decline. According to the US Inflation Calculator, inflation for the 12 months ending December 2023 stood at 3.4%, compared to 6.5% in December 2022. A decrease in this indicator creates conditions for possible monetary policy easing by the US Federal Reserve System (Fed) in 2024.

Interest rate cuts by the regulator may weaken the US dollar, which, in turn, can make silver more attractive for investors seeking assets protected against inflation. JPMorgan Chase expects the Federal Reserve’s cutting cycle and falling US real yields to push gold and silver prices up to new nominal highs of 2,175 USD and 30 USD, respectively in the second half of 2024.

Reducing dependence on the US dollar

According to Reuters, BRICS countries aim to reduce dependence on the US dollar in international trade and finance. Weaker positions of the US currency may lead to lower demand for it as a reserve currency, which, according to the Kitco Metals forecast, may drive up demand for gold and silver.

Mine supply and production

Based on data from the Silver Institute, global silver mine production might have fallen by 2% in 2023, down to 820 million ounces, compared to the 2022 statistics, driven by lower output from large deposits in Mexico and Peru. Recycling of secondary silver obtained from scrap and waste might have risen by 1% to 181 million ounces last year. According to the Silver Institute forecast for 2024, precious metal mine production is expected to rise by 4%, reaching 843 million ounces.

Industrial demand

Based on the Silver Institute forecast for 2023, global industrial demand for silver might have increased by 8% from 2022, reaching a record 632 million ounces. The primary growth drivers could be investments in renewable energy, power grids, 5G networks, consumer electronics, and the automotive sector. As projected by the Silver Institute, in 2024, industrial demand for silver will grow by 4% to 690 million ounces, with photovoltaics (P.V.) and automotive industries being the key growth drivers.

Investment demand

According to the Silver Institute forecasts for 2023, physical investments could have decreased by 21%, down to 263 million ounces, marking the lowest value since 2020. The main reason behind this is probably the record-high silver prices in India, which might have deterred investors from buying and led to profit-taking.

A second reason could be an increase in the VAT for physical gold in Germany at the beginning of 2023. Investments in this metal in the US might have also dropped last year, but insignificantly, due to robust demand for safe-haven assets following a banking crisis.

The Silver Institute’s forecast for 2024 suggests that silver physical investments may decrease by 6%, marking the lowest reading since 2020.

Jewellery demand

Based on the 2023 forecast of the Silver Institute, demand for silver jewellery might have fallen by 22% from 2022, down to 182 million ounces. This fall may be attributed to the normalisation of demand in India following a surge in 2022. According to the Silver Institute forecast for 2024, demand for silver jewellery is projected to see a 6% rise.

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Silver price analysis 2024 – technical outlook

Silver quotes have been confined within a Triangle pattern since 8 March 2023. The technical analysis considers that a breakout and completion of this pattern can happen in any direction, up and down. A breakout of the pattern’s upper boundary, with the quotes gaining a foothold above 26.00 USD, may indicate a potential pattern target of 33.45 USD.

A rebound from the support line on the RSI serves as an additional signal confirming a potential price rise to the upper boundary of the Triangle pattern at 25.55 USD. A previous rebound from this line was observed on 5 October 2023, resulting in a 25% price rise. At the same time, the level of 26.00 USD acts as solid resistance for buyers. The price rebounded from this resistance level on 4 December 2023, declining by 15%.

Quotes consolidating below the 21.00 USD level could be a negative scenario for bulls, indicating a breakout of the lower boundary of the Triangle pattern. In this scenario, the potential decline and pattern target could be the 17.50 mark.

Silver Price Analysis*

Silver price forecasts for 2024

• J.P. Morgan Research analysts expect silver prices to reach 30 USD per ounce in Q4 2024
• According to Capex, median silver prices in 2024 are projected to be 24.85 USD per ounce, with highs at 34.70 USD. The World Bank expects the metal to trade within the range of 20-25 USD in the next five years
• Heraeus economists expect the quotes to move within the range of 22-29 USD in 2024
• InvestingHaven specialists predict that silver prices will reach 34.70 USD in 2024

Silver investment strategies

• Physical silver investments. These are probably the simplest and safest way of investing in the precious metal. They involve buying coins, bars, and other forms of physical silver
• Investments in shares of silver mining and processing companies. These may bring in higher income than physical investments but involve a higher potential capital risk. Returns on such stocks may depend not only on the metal price but also on other factors, such as mining conditions, company management, and overall market trends 
• Investments in silver futures and options. Operations with these financial instruments are more complex and may involve a high-risk level. As such, they typically require high market knowledge and understanding as well as expertise in derivative trading
• ETF investments. These funds trace the performance of the precious metal’s prices and are traded on stock exchanges. Investments in such ETFs enable investors to easily purchase an asset linked to silver prices in financial markets, ensuring portfolio liquidity and diversification
• Investments in silver mutual funds. They typically invest in securities of various companies related to silver, thereby aiming at diversifying their portfolios. This investment vehicle may be less risky than buying shares in one representative of the silver mining and processing industry

Risk management strategies for silver investments

• Diversify your portfolio. If you want to concentrate your investments solely on this metal, use the various investment vehicles mentioned above. However, we recommend not relying exclusively on silver and distributing investments across multiple asset classes related to different economic sectors
• Evaluate market trends. Silver prices can be volatile. Keep track of economic indicators, industrial demand, and geopolitical events that may influence the metal’s value. This will help you make more informed investment decisions 
• Set clear investment goals. Decide whether to use silver for long-term investments, hedging against inflation, or short-term investments. This can help you choose the right risk management strategy
• Use averaging. Investing a fixed amount in silver at regular intervals can help you reduce the potential risk of investing heavily at an inopportune time
• Limit the use of leverage. While using borrowed funds for silver investment may increase returns, it may also increase losses. Be cautious when applying leverage, especially in volatile markets
• Control your emotions. Avoid making impulsive decisions based on short-term market movements. Keep your emotions in check and adhere to your investment strategy
• Regularly review and rebalance your portfolio. Systematically adjusting positions as market conditions change may help your investments better align with your chosen strategy, goals, and risk
• Use Stop Loss. This order allows for the automatic closure of positions when prices reach a level the investor sets. Using Stop Loss can help mitigate potential losses
• Only invest what you can afford to lose. Silver investments carry the risk of loss. Make sure that the amount invested in the precious metal is not crucial to your financial needs

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Conclusion

The above forecasts suggest that 2024 may experience a higher industrial and jewellery demand, which may drive up the precious metal’s value amid potential interest rate cuts by the US Federal Reserve. Silver prices are projected to range from 22 to 34.7 USD per ounce in 2024.

Technical analysis indicates the formation of the Triangle pattern, possibly signalling market uncertainty. If quotes break above the pattern’s upper boundary, they will likely target the 33.45 USD level.

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