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Silver continues to rally as traders eye multi-year high at $34.35

2024-09-27

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Silver prices surged to $32.72 today during New York trading hours, surpassing the previous yearly high of $32.52. If the current trend continues, this new bullish momentum will put the multi-year high of $34.35 within reach.

Investors are closely watching for any signals that could push silver prices higher, especially as the price moves further away from its 50-day moving average, which has heightened concerns about potential volatility.

Silver has been one of the best performing major commodities this year as the Federal Reserve's shift to an accommodative monetary policy last week and the prospect of further rate cuts have favored the non-yielding metal.

Silver's gains have also been supported by the potential for increased industrial use as China takes steps to boost its economy, while inflows into silver-backed exchange-traded funds have also shown signs of picking up. But silver prices are still well below their all-time high of nearly $50 set in 2011.

Short-term market forecast

In the short term, silver prices are expected to continue their gains and could potentially hit $35 an ounce if the Federal Reserve signals further rate cuts. However, profit-taking could occur at year-end, especially if silver enters overbought territory.

The average price for the fourth quarter of 2024 is expected to be $31.76, as the market could see some short-term corrections after a strong performance throughout the year. As silver prices move further away from key technical levels, traders should remain cautious of increased volatility.

Analyst view

Ole Hansen, head of commodity strategy at Saxo Bank, said: "Continued strength in gold prices and steady higher silver prices should keep silver outperforming gold, with the gold-silver ratio falling back to the 70-75 area, which could drive silver to outperform gold by 10%."

Hamad Hussain, assistant economist at Capital Economics Climate and Commodities, said: "Traders appear to have overestimated the likelihood of another 50 basis point rate cut by the Federal Reserve in November. Therefore, the rise in silver prices is unlikely to be sustained in the coming months as some of the favorable factors driving silver demand gradually fade."

Max Layton, an analyst at Citi, said: "Rate cuts should be positive for global economic activity and support silver consumption. We expect silver prices to rise to $35 in the next 3 months and $38 in the next 6-12 months."

Macquarie expects the silver market deficit to persist over its 5-year forecast period. The firm said investor flows are likely to remain key to short-term price action, with ETF holdings likely to offer the most room for support.

“We believe silver’s medium- to long-term performance will be determined primarily by gold rather than specific developments in the silver market,” said Carsten Menke, an analyst at Julius Baer.

The above information is provided by special analysts and is for reference only. CM Trade does not guarantee the accuracy, timeliness and completeness of the information content, so you should not place too much reliance on the information provided. CM Trade is not a company that provides financial advice, and only provides services of the nature of execution of orders. Readers are advised to seek relevant investment advice on their own. Please see our full disclaimer.

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Silver continues to rally as traders eye multi-year high at $34.35

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