Silver Price Overview: Struggles Below Key $32 Level Amid Market Shifts

Market Overview

Silver prices (XAG/USD) hovered at $31.85 on Monday, despite a strong surge in demand, particularly from the solar energy sector. The recent decline can be attributed to improved market sentiment. Investors are shifting focus away from safe-haven assets due to easing concerns over a U.S. economic slowdown and optimism around China’s stimulus efforts.

Supply Shortages Drive Market Deficit for Silver

Ongoing supply shortages are set to play a critical role in determining silver’s future trajectory. According to the Silver Institute, global silver demand has outpaced supply for three consecutive years, with a projected deficit of 215 million ounces for 2024. This imbalance is driven by increasing industrial consumption and limited new mine production. Despite the rise in prices—up from $13.30 per ounce in 2016 to over $31 today—production remains 62.8 million ounces below its peak in 2016.

Transition Metals Shortage Poses Broader Market Risks

• Bloomberg NEF report highlights broader shortages in key transition metals, potentially elevating silver prices.
• The report estimates a $2.1 trillion investment needed by 2050 for stable supply in clean energy technologies.
• Without this investment, essential metals costs could rise sharply by 2030.

Market Outlook: Potential for Higher Silver Prices

For now, the combination of rising demand and limited supply points to higher silver prices in the near future. As shortages deepen, competition for these limited resources may increase prices, especially if supply disruptions persist. Staying attuned to these market developments will be crucial for investors and industries relying on silver. This will help them navigate potential price volatility and secure long-term supply stability.

Short-Term Forecast

Silver is likely to remain range-bound between $31.78 and $32.27. A breakout above $32.27 could target $32.47, while a drop below $31.78 risks further declines.

Silver Price Forecast: Technical Outlook

Silver (XAG/USD) is trading at $31.85, down 0.29%, and hovering below the $31.98 pivot point. The 2-hour chart shows an upward trendline, indicating a supportive buying trend, but prices remain constrained below the 50-day EMA of $31.99. Immediate resistance is at $32.27, and a break above this level could lead to further gains, with potential targets at $32.47 and $32.64. On the downside, the first support level is $31.78, followed by $31.61. A break below $31.61 could push prices lower to $31.41, signalling a possible shift to bearish sentiment. Until silver decisively moves above $31.98, it may struggle to gain upward momentum in the short term.