Silver Price Forecast for 2024 – XAG/USD Could Go to $28 Next Year
NEW YORK (December 31) Silver has been very noisy during the bulk of 2023, and if you look at it in reference to other markets such as the EUR/USD, you can see a relatively common theme in the sense that we have essentially spent the entire year going nowhere.
You certainly would be forgiven if you were a trader that feels like this was a very eventful year because, quite frankly, it was. However, if you were an investor, you are looking at this with a certain amount of disbelief, as we are closing out the year basically where we started it. That’s not to say there wasn’t plenty of action to be dealt with, just that we have been stuck in a range for quite some time.
Interest Rates
One of the biggest drivers of precious metals markets is undoubtedly the interest rate markets. Interest rate markets in America are the biggest drivers of almost everything, and of course silver won’t be an exception. As interest rates rose during the year, we did see silver drop from the $26.20 region down to the $20.50 region. This was after an initial plunge at the beginning of the year when the Federal Reserve began to talk about tightening. There was a time frame where traders started to think that the Federal Reserve was going to cut rates, right around early spring when silver truly took off. The question now is whether or not they can find that magic again?
Silver Isn’t Gold
One of the biggest mistakes that traders make is that they assume silver and gold are going to behave the same. While he can be true for long periods of time, there are some nuances that you need to be aware of. Silver is essentially always undersupplied, but regardless there has been a very stable amount of resistance at times in this market. J.P. Morgan has been caught multiple times over the years manipulating the market, and gladly pays a fine every time it gets to be a bit too expensive for their liking. There are a few other banks that have been caught doing this as well, so in that sense you should probably pay attention to the fact that the silver market is pushed around.
It’s also worth noting that the market doesn’t just pay attention to interest rates, but it pays attention to industrial demand. Although there are some use cases for gold, silver is a much more industrial metal than a precious one these days, as it is a main ingredient to a lot of “green technology.” With that in mind, people will begin to wonder whether or not the Federal Reserve loosening monetary policy is a sign that they are going to boost the economy, or if it’s a sign of fear.
2024 Could Likely Be Similar
While it brings me no joy to think this, it’s very likely that 2024 could be very similar to 2023. This is because at the beginning of the year I anticipate that a lot of people will be paying attention to interest rates, and ignoring the fact that there could be some trouble under the hood. If the Federal Reserve is in fact going to cut rates due to some type of panic, that will have the US dollar strengthening eventually as traders run toward the treasury market, and silver suffers the double whammy of lower rates and less industrial demand.
As for the silver market in 2024, I suspect that we are going to test that $26.20 level, and if we can break above that level, we could go as high as $28. However, if there are concerns about the global economy that might be about as far as the market can go. As things stand right now, it looks like we are probably going to be in a somewhat similar range as to what we were last year.
FXEmpire
