Silver Price Forecast – November 2024

Key Takeaways

• Silver hits a 12-year high in October at $34.87/toz
• Investor demand for silver is currently very strong
• Silver’s technical position appears quite vulnerable

Silver Still Discounting Reflation, Despite Weak Outlook

October saw silver climb to a 12year high if $34.87/toz, (1) supported by rate cuts from the central banks of South Korea, the Euro Zone, China and Canada. The global rate-cutting cycle is becoming more firmly entrenched, despite the US rate pullback noted in our Gold Price Forecast. Recent growth data has been less disappointing but is due to lowered expectations rather than better performance. The global economy – and industrial silver- needs further support to justify the substantial price rally that we have seen in recent weeks.

To illustrate the point, the IMF published an updated World Economic Outlook on 24 October (6) in which it trimmed its economic forecasts for the Euro Zone and China for 2024. Although the global economy was spared a downgrade by a resilient US economic performance, this is largely a function of an unsustainable budget deficit. The growth forecast for 2025 was trimmed, while over the medium-term the report noted ‘Five years from now, global growth should reach 3.1 percent—a mediocre performance compared with the pre-pandemic average’. All eyes will now be on China’s National People’s Congress meeting in November for details of an economic support package.

Russian Central Bank Bolsters Silver Investment Demand

While we have long argued that silver was maturing as an investment product, it would be naïve to suggest that the path would be a straight or easy one. Investor demand for silver has seen relative stability for much of this year, but such demand remains niche relative to gold, with the official sector notably absent. However, investment silver took a step forward in October with the announcement that Russia’s central bank will be adding silver to its list of eligible reserves. Although an isolated move at present, this might promote wider adoption, given Russia’s leading position within the BRICS group of countries that seek to weaken the primacy of the US Dollar as a reserve asset.

Perhaps boosted by this news, the most recent Commitments of Traders (CoT) report from the CFTC (5). suggests that speculative silver net long futures positions surged in October to the highest levels seen since February 2020, largely driven by an increase in ‘managed money’. Moreover, net inflows to physical silver ETFs/ETCs have also been robust (7) over the last month, showing little of the price sensitivity seen only a few weeks ago. For this month at least, investor silver demand is firing on all cylinders. 

Technical Analysis

Although silver managed to reach a 12-year high of $34.87/toz in October, the rally could not be sustained and major horizontal resistance at $34.99/toz has now been reinforced. Silver is now trading with weakening momentum along minor ascending support at $33.54/toz which seems unlikely to hold. A subsequent break below major horizontal and major ascending oblique support at $33.44/toz and $33.27/toz respectively would present the ascending 20-day Simple Moving Average at $32.30/toz as potential support and beyond that major horizontal support at $32.06/toz. Further support levels are indicated at $30.84/toz (ascending 50-day Simple Moving Average), $30.61/toz (major ascending oblique) and $30.22/toz (major descending oblique). 

Key Drivers Ahead

Notable events ahead for silver investors include Q3 Flash Euro Zone GDP data and Q3 Flash US GDP data on 30 October, October China Caixin Manufacturing PMI and October US ISM Manufacturing PMI on 1 November, China National People’s Congress 4-8 November, US Presidential Election and October China Services PMI 5 November, US FOMC Rate Decision & Press Conference 7 November, November Japan Tankan Index 8 November, November Euro Zone ZEW Economic Sentiment Index 12 November, Q3 Japan Flash GDP, October China Industrial Production, and October China Retail Sales all on 15 November, November Flash Germany HCOB Manufacturing PMI 22 November, November Germany IFO Business Climate Index 25 November, US FOMC Minutes 27 November and November China NBS Manufacturing PMI 30 November.

Citations

1. 1.https://www.lbma.org.uk/prices-and-data/precious-metal-prices#/table 

2.https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value=2024

3.https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html?redirect=/trading/interest-rates/countdown-to-fomc.html 

4.https://www.gold.org/goldhub/data/gold-etfs-holdings-and-flows

5.https://www.cftc.gov/dea/options/other_lof.htm

6.https://www.imf.org/en/Publications/WEO/Issues/2024/10/22/world-economic-outlook-october-2024

7.https://www.trackinsight.com/en/compare-etfs/PHAG,SSLV,OXA6,SLV,SIVR