Silver (XAG) Daily Forecast: Will Resistance at $31 Cap Price Gains?

Market Overview

Silver (XAG/USD) has recently edged upward but remains below key levels, settling near $30.64. While price movement appears constrained, market fundamentals suggest potential gains as demand pressures build.

Analysts note a continued physical silver deficit, now entering its fourth year, driven by robust industrial demand and investment interest. This deficit, coupled with supply limitations, may support silver prices in the coming months.

Global Demand Driven by Green Energy, Automotive, and Electronics

Global industrial demand for silver is expected to grow by 7% in 2024, surpassing 700 million ounces for the first time. The push toward renewable energy, particularly solar, has been a significant driver, as the sector relies heavily on silver.

Demand for silver in electronics and automotive manufacturing also remains strong, supporting overall consumption. Additionally, silver jewelry and silverware demand is projected to increase by 5%, led by rising imports to India, thanks to reduced import duties.

Decline in Physical Investment, Yet ETP Inflows Rise

Despite strong industrial demand, physical silver investment is expected to drop by 15% this year, hitting a four-year low. Fewer economic concerns have tempered retail demand for silver coins and bars.

However, exchange-traded products (ETPs) are seeing robust inflows, as expectations of Fed rate cuts and a potential dollar weakening make silver an attractive hedge.

Dollar Strength and China’s Stimulus Affect Silver Outlook

A strengthening U.S. dollar, supported by anticipated fiscal policies, has created headwinds for silver. The dollar’s rise increases silver’s cost in other currencies, which may limit demand.

Upcoming U.S. inflation data, expected to show a 2.6% year-over-year increase in the Consumer Price Index, may shape future Federal Reserve policy. Analysts predict that further rate hikes to control inflation could boost the dollar, pressuring silver prices.

China’s recent 10 trillion Yuan debt package has also fallen short of investor expectations, affecting silver-demanding industries in Asia. Reduced Chinese demand and a strong U.S. dollar may constrain silver’s short-term gains, though a supply deficit remains a potential support for prices.

Short-Term Forecast

Silver’s short-term forecast hinges on breaking resistance at $31.03. A rise above could trigger bullish momentum, while holding below this level may signal further consolidation.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver is trading at $30.85, showing a modest 0.42% increase on the 4-hour chart. Currently, it’s just below the pivot point at $31, which aligns with a downward trendline acting as resistance.

Breaking above this level could spark further gains toward resistance targets at $31.29 and $31.55. The 50-day EMA at $30.84 provides near-term support, but stronger support sits at $30.65, with additional levels at $30.43 and $30.19.

The 200-day EMA, further up at $31.67, marks a more significant resistance. Overall, silver remains slightly bearish below $31; a break above could shift momentum toward a bullish trend.