As the dust has settled after the US election, market dynamics are shifting focus towards monetary policy decisions and ongoing geopolitical tensions.
An exceptionally successful year for precious metals is drawing to a close. The price of gold $Gold - main 2502(GCmain)$ has risen impressively by 30.9% in USD terms. Silver $Silver - main 2503(SImain)$ has recorded an increase of +31.75%. When calculated in euros, the annual balance looks even better, with the gold price currently showing a gain of 37%. Leading the way is the silver price in euros, with an increase of over 37.6%. This outstanding performance once again underscores the strength of these two precious metals, which have proven to be a safe haven in a dynamic and volatile market environment.
12-year high slightly below USD 35 in October
After a bumpy start to the year around USD 23.70, silver initiated its first upward wave from late February, which initially carried prices up to USD 32.5. Following a three-month consolidation period, silver bulls then launched the next ascent starting from a low of USD 26.40 on August 8th.The momentum was sufficient for a push all the way up to USD 34.86.
Starting from this 12-year high, silver prices fell significantly in November. The pullback ended perfectly with a double bottom at USD 29.68 on November 14th and USD 29.64 on November 28th. Since then, a considerable recovery has been recorded, which has led silver prices to the downward trendline of the last seven weeks at USD 32.34 as of last Wednesday. Not surprisingly, this resistance zone forced a pullback, causing silver to take a significant hit towards the end of last week. With prices trading around USD 30.50 the double low is already within sight again.
Silver is trading around the USD 30 mark for 8 months
In the bigger picture, however, silver has been consolidating in a rather narrow range around and above USD 30 for nearly eight months, indicating a period of price equilibrium. This stability suggests the market has found a balance between supply and demand at current levels. Overall, the price is holding above the COVID-era highs around USD 30, which now serve as strong support.
Despite persistent rumors of tight lease rates and multi-year inventory deficits, silver prices have remained relatively steady. The market seems to be discounting these factors for now, as prices are looking for a stable bottom.
At the same time, it appears that gold’s pullback since end of October might be coming to an end. Only if the November lows at USD 2,535 would be taken out, a deeper correction must be expected, The gold/silver-ratio at around 87, however, doesn’t indicate any immediate shift in favor of silver either.
Silver in US-Dollar, Weekly chart
The weekly silver chart presents a bull market in progress which started back in March 2020 at USD 11.58. Most likely, silver wants to leave its 4-year price range between USD 12 and USD 30 rather soon and with emphasis. Over the course of the last five weeks, the important and strong support around USD 30 withstood the bears’ attacks and brought new buying into the market.
As the overbought conditions have been alleviated, the pullback since 22nd of October has done its job. Last week’s candle indicates that the bulls were trying to get back in control but failed. To proof their determination, silver bulls would need to push prices back up towards last week’s high at 32.34 soon. In the next step, the high for the year at USD 34.86 must be overcome in the coming months.
Overall, the weekly chart is neutral. Nevertheless, the mid-term prospects for silver are certainly promising, as the metal has significant catch-up potential after lagging behind gold in this bull market cycle. The elevated gold/silver-ratio suggests that silver prices may rise at a faster rate than gold in the coming months. Additionally, the seasonal trend for precious metals typically turns bullish from mid-December through spring, which aligns perfectly with the current market setup and could amplify upward momentum into 2025.
Silver in US-Dollar, Daily chart
On the daily chart, silver experienced a pullback towards the key support zone around USD 30, finding strong buying interest just above the 200-day moving average (USD 29.54). At these levels, bulls re-entered the market decisively, defending this critical support level, which was further reinforced by a former downtrend line that has now transitioned into an additional support layer.
This confluence of technical factors led to the formation of a double low at USD 29.68 and USD 29.64, signaling a short-term trend reversal and renewed bullish momentum. The resilience of this support zone highlights its significance as a pivotal level for silver’s ongoing uptrend.
However, the robust rally over the past two weeks had pushed the daily stochastic oscillator quickly into overbought territory, presenting a critical juncture for silver’s momentum. Hence, last week’s pullback just a few days before the last FOMC meeting of the year came as no surprise. As long as silver can defend its 200-day moving average (USD 29.54), the uptrend is not in danger at all.
At the same time, the main technical development in the silver market is the emergence of a bullish wedge pattern, which suggests a potential upward breakout in prices in the new year. Within this pattern, silver might still test the lower boundary between USD 29 and USD 28.50. Even though, the psychological level of USD 30 as well as the recent double low would be undercut, we assume that this would only mean a final shake out of weak hands.
In essence, the daily chart is bearish at this point. A final dip below USD 30 should be limited in time and lead to a reversal to the upside in the new year.
Conclusion: Bullish wedge limits remaining downside
In summary, the silver market presents a distinctly bullish outlook for the new year. In the very short-term, however, silver might still dip below USD 30 for a final flush out of any weak hands.
From a fundamental perspective, silver supply remains tight as new deposits are becoming harder to find, more expensive to develop and requiring more by way of capability to manage risk and technical capability. At the same time, increasing industrial demand, especially in green technologies and electronics, creates a favorable supply-demand dynamic for silver. Technical indicators, such as the weekly stochastic oscillator, suggest that recent pullback has refreshed the market, setting the stage for the next leg up in 2025.
Furthermore, anticipated shifts in monetary policy, including potential interest rate cuts, are likely to enhance silver’s appeal as an investment. Given these factors, the current setup positions silver for significant gains in the coming months, potentially outperforming other asset classes as it capitalizes on both industrial and investment demand.
Our bold price target until spring 2025 = approx. USD 50
We are maintaining our price target of approx. USD 50 for silver by late spring 2025. The drivers are a strong technical momentum, seasonal trends, increasing industrial demand, favorable monetary policy shifts, and projected supply constraints.
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