Since its peak of $49.51 in April 2011, silver price has struggled to regain momentum, with its highest recent price of over $28 during the COVID-19 pandemic in May 2021. In contrast, gold has repeatedly surpassed its own records in 2023. However, global economic uncertainties post-pandemic and geopolitical tensions have revived silver’s status as a safe-haven asset. In 2023, it reached $26 despite central banks’ aggressive rate hikes.
Now, as we enter 2024, silver prices surge on Federal Reserve expectations. Let’s delve into silver price analysis, forecasting its trajectory for 2024 and beyond while considering recent developments and factors influencing its price dynamics.
Silver Price Analysis In Recent Years
In recent years, the trajectory of silver prices has mirrored that of gold, with both metals experiencing notable fluctuations driven by economic indicators and Federal Reserve policy decisions. Throughout 2023, silver exhibited strength, aligning with concerns about a potential recession and expectations of Federal Reserve intervention to ease monetary tightening.
The year began on a strong note for silver, with prices rallying from the last quarter of 2022. Opening at over $24, silver traded within the range of $23 to $25 before peaking at more than $26 in May 2023, marking its highest level since April 2022. This upward movement was largely influenced by the course of the Federal Reserve’s monetary policy, which mirrored its impact on gold prices. The Fed’s aggressive measures, initiated in March 2022, bolstered the US dollar and raised bond yields, exerting pressure on non-yielding assets like gold and silver.
However, by September 2023, the Fed opted to pause its interest rate hikes, maintaining the benchmark Federal Fund Rate target range at 5.25% to 5.50%. This decision came as US inflation moderated, with the rate reaching 3.2% in July 2023, down from a peak of over 9% in 2022. The prospect of future rate cuts buoyed hopes among investors, underpinning silver prices.
Despite the overall stability of silver prices in 2023, the onset of 2024 brought new challenges. Anticipated slowing industrial demand and stronger-than-expected US inflation in January cast doubts on the possibility of an early interest rate cut by the Federal Reserve. However, as of March 11, 2024, silver prices surged, reaching their highest level since December 2023. Market anticipation of a change in the Federal Reserve’s interest rate strategy propelled this upward movement.
Notably, the price of silver has seen a substantial increase from March 2023 to March 2024, rising from around $20 to $24.3 per ounce. This 21% growth underscores the dynamic nature of silver prices and the myriad factors influencing its trajectory, including economic indicators, central bank policies, and market sentiment.
Factors Affecting Silver in 2024
As we navigate through 2024, several key factors are shaping the trajectory of silver prices.
- Macro Economy and Federal Reserve Policy: Silver prices are influenced by macroeconomic indicators and Federal Reserve policy decisions. Expectations of interest rate cuts by the Fed in response to economic conditions play a significant role in shaping silver’s price trajectory. Factors such as job additions, unemployment rates, and the Consumer Price Index are closely monitored by investors to gauge the likelihood of Fed interventions, which in turn impact silver prices.
- Industrial Demand: Silver’s extensive industrial applications make it highly susceptible to changes in global economic activity. Factors such as economic growth rates, particularly in sectors like construction and automotive manufacturing, significantly influence silver demand. Despite projections of modest growth in industrial demand for silver in 2024, challenges in sectors like construction, especially in China, could potentially dampen overall demand.
- Limited Supply: Similar to gold, silver’s limited supply dynamics contribute to its price volatility. While the global silver supply is forecasted to increase in 2024, it may still lag behind demand, as evidenced by undersupply trends since 2021. Risks to silver output, such as the suspension of zinc mines due to weak prices, further underscore the importance of supply-demand dynamics in determining silver prices.
- Geopolitical Risks: Geopolitical tensions, particularly in regions like Ukraine and the Middle East, pose additional uncertainties for silver markets. Moreover, the upcoming US presidential election in November 2024 could impact silver prices, with potential shifts in demand for safe-haven assets depending on the outcome of the election. Factors like these contribute to the overall risk environment affecting silver prices in 2024.
Silver Price Predictions for 2024
The silver price forecasts for late 2024 and beyond present a mixed outlook, with various factors influencing the trajectory:
- Coin Price Forecast: CoinPriceForecast projects a bullish sentiment, estimating silver to end 2024 at around $28 per ounce. Their technical analysis indicates the potential for a price breakout above resistance levels, with a target of $28 by year-end.
- Long Forecast: Long Forecast adopts a more conservative stance, expecting silver to trade within the range of $20-23 per ounce towards the end of 2024. This projection considers declining investment demand late in the year, offsetting growth in industrial usage.
- Capex: Analysts at Capex forecast silver to conclude 2024 near $25 per ounce. They anticipate expanding industrial demand to support prices, potentially reaching highs of around $34.70 despite potential growth in mine supply.
Long-Term Silver Price Predictions
Looking further ahead, long-term predictions suggest a blend of optimism and pragmatism, with expectations of continued volatility amidst factors like supply responses and geopolitical developments.
- Coin Price Forecast: By 2030, CoinPriceForecast envisions silver nearing its highest annual average price of the decade, reaching close to $61 per ounce. However, they anticipate ongoing high volatility.
- Long Forecast: Long Forecast foresees a modest downtrend during 2025-2028, contained by supply responses. They predict continued volatility in the range of approximately $16.5–$24 per ounce around the steadier downtrend.
Conclusion
In conclusion, the silver price analysis in recent years and predictions for 2024 and beyond highlight the complex interplay of economic, geopolitical, and supply-demand factors shaping its trajectory. Despite facing challenges such as anticipated slowing industrial demand and geopolitical uncertainties, silver has demonstrated resilience, propelled by its status as a safe-haven asset amidst global economic uncertainties.
Forecasts from various sources present a mixed outlook for 2024, with bullish sentiments tempered by cautious projections, indicating the uncertainty surrounding silver’s future path. As investors navigate this dynamic landscape, they must remain vigilant, recognizing the multifaceted nature of influences driving silver prices, and adapt their strategies accordingly to capitalize on opportunities and mitigate risks in the silver market.
Also read: How to Invest in Silver UK- Complete Guide