Silver (XAG) Daily Forecast: Will Silver Break $29.94 Amid Surge in Demand from India?

Market Overview

Silver (XAG/USD) kicked off the week with gains, climbing to $29.69 and briefly touching an intra-day high of $29.93. Several key factors are fueling this rally, including growing demand across multiple regions and geopolitical tensions that are tightening supply.

India’s silver imports are expected to nearly double this year, driven by surging demand in the solar industry and for investment. Similarly, Kyrgyzstan saw a dramatic 90-fold increase in silver exports during the first half of the year, underscoring the heightened global demand that is supporting prices.

The Silver Institute projects a 2% rise in global silver demand from 2023 to 2024, reaching around 1,219 tonnes. Beyond industrial use, silver is also attracting investors amid growing expectations of a 25-basis-point rate cut by the Federal Reserve in September. The CME FedWatch Tool indicates that the market has fully priced in this rate cut.

India’s Silver Demand Surge Expected to Lift Global Prices

India’s silver imports are set to nearly double this year, driven by increased demand from solar panel manufacturers, electronics producers, and investors seeking higher returns compared to gold. As the world’s largest silver consumer, India imported 3,625 metric tons last year.

However, imports are expected to climb to between 6,500 and 7,000 tons in 2024, supported by industrial needs and a recent reduction in import duties from 15% to 6%, making silver more accessible.

In just the first half of 2024, India imported 4,554 tons of silver, a sharp increase from 560 tons during the same period last year. This surge is partly due to robust investment demand, with local silver futures reaching record highs in May.

Additionally, industrial buyers have been stockpiling silver to hedge against rising prices, as India mainly imports the metal from the UAE, Britain, and China.

Kyrgyzstan’s Silver Export Boom and Its Global Impact

Kyrgyzstan’s silver exports skyrocketed in the first half of 2024, increasing 90-fold compared to the same period last year. The country exported 22.7 tons of silver valued at $17.9 million, a significant leap from just 312 kilograms worth $197,000 in the first half of the previous year.

This sharp increase is largely due to rising demand from India and Switzerland. Kyrgyzstan exported 21.7 tons of silver to India, accounting for 95% of its total exports, valued at $17.1 million. Additionally, smaller quantities were shipped to Switzerland and Hong Kong, further highlighting Kyrgyzstan’s growing importance in the global silver market.

The dramatic rise in Kyrgyzstan’s silver exports, particularly to India and Switzerland, is likely to support global silver prices, reflecting strong demand amid potential supply constraints.

Short-Term Forecast

Silver’s bullish momentum hinges on breaking $29.94 resistance. Holding above $29.35 support may attract buyers, but failure to breach resistance could trigger declines.

Silver (XAG/USD) Price Forecast: Technical Outlook

Silver (XAG/USD) is currently trading at $29.69, down 0.50% in the latest session. On the 4-hour chart, silver faces immediate resistance at $29.94, a key level that has capped gains so far.

The 50-day Exponential Moving Average (EMA) at $29.36 offers solid support, closely aligned with an upward trendline around the same area. If silver tests and holds above the $29.35 support level, it could provide a good entry point for buyers.

Bearish below $29.94. A break above this level could ignite renewed bullish momentum, while failure to do so may lead to further declines.