Silver Exposure: Industrial Demand and Market Dynamics Affect Prices
Market Overview
Despite a surge in the Shanghai silver premium, which signals robust domestic demand, silver (XAG/USD) continues to face downward pressure. Trading around $31.12, the metal hit an intraday low of $30.76 as traders recalibrated expectations for a significant interest rate cut from the Federal Reserve in November. The strengthening U.S. dollar, coupled with waning investor confidence in fiscal stimulus from China, has led to a bearish outlook for silver.
The Role of Silver in the Global Energy Transition
Silver plays a crucial role in the global energy transition, particularly in producing solar panels and electric vehicles. Industrial silver demand, expected to rise by 9% in 2024, continues to drive the market.
- This demand, especially for photovoltaic panels, has pushed silver prices higher, surpassing $32 per ounce for the first time in a decade.
Mexico, the world’s largest silver producer, contributes 25% of the global supply. Companies like Mithril Silver and Boab Metals are actively exploring new silver projects, underscoring the growing importance of this precious metal in clean energy technologies.
Shanghai Silver Premium and Global Market Impact
The Shanghai silver premium, a key indicator of China’s domestic demand, has surged from 2% to 13.7% over the past year. This reflects rising demand from China’s photovoltaic industry and hints at potential global price volatility.
- As silver holdings in ETFs decline, China’s growing industrial demand is outpacing global supply, potentially pushing international prices higher.
In conclusion, the rising Shanghai silver premium highlights China’s significant role in shaping global silver markets, with demand likely to influence prices well into 2024. Investors should prepare for potential supply disruptions and increased volatility as silver remains integral to the energy transition.
Short-Term Forecast
Silver (XAG/USD) remains under pressure, trading at $31.12. Immediate support lies at $30.90, with resistance at $31.27. A break below support could drive further declines.
Silver (XAG/USD) Price Forecast: Technical Outlook
Silver is trading at $31.12, down 0.25%, with the price moving sideways due to a symmetrical triangle pattern. The pivot point sits at $31.27, acting as a key level for both buyers and sellers.
- A break above this level could trigger further gains toward $31.54 and $31.78 resistance levels, with a more bullish outlook targeting $32.22.
- However, if silver breaks below immediate support at $30.90, further declines could be seen, with the next support at $30.64 and $30.22.
The 50-day EMA at $31.18 is closely aligned with current price action, indicating near-term indecision.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.