Silver Price Forecast - February 2024

In the first few weeks of 2024, the price of silver struggled, falling from $24 to below $22 per ounce on January 24th – right before attempting to rebound. 

What is the technical and graphical scenario for silver? And what are the leading market drivers for silver? In this silver price forecast, that’s exactly what we’ll cover. 

Key takeaways

• Silver started 2024 ‘in the red’, as investors were fearing a “higher-for-longer interest rates” approach from the Federal Reserve
• The price has a solid support zone at $22
• The break-up of $23.5 would open space for further recoveries
• Physical demand is expected to remain solid, primarily due to the industrial sector

Silver Price: Technical Analysis

The technical analysis of silver presents a mix of indications. The bullish trend seen in the final part of 2023 has been undermined by the decline of January 2024. At the same time, silver has established a solid support zone in the region of $22. 

To expand on this, the recent recovery of silver has brought the price close to the dynamic resistance zone generated by the bearish trendline of the last few weeks. A clear surpass of $23-$23.2 would trigger a reversal pattern, moving silver into a lateral scenario which could become bullish with the break-up of the $23.5 area. In that case, of positive impulses, the first target will be $24.5, followed by $25.8 – the high reached in December last year.

Conversely, if bearish trends persist and the price falls below $22, the next critical support level to watch out for is $20.5 – the low recorded in early October 2023.

The Key Market Drivers For Silver

The primary factor influencing silver prices is widely known to be the decisions of central banks, as is the case with gold and many other financial assets. In January, the market’s adjustment to the anticipated number of rate cuts by the Federal Reserve in 2024 was a negative driver for silver, leading to an approximately 5% decline in its value.

Any dovish announcement from the Federal Reserve or declines in bond yields could support the price (pushing up the demand for silver). Indeed, another key driver for silver is physical demand, which warrants further examination here.

Silver Physical Demand: Industry and ETFs

The Silver Institute’s 2023 report highlights that industrial demand for silver has reached an unprecedented high and is expected to grow further, with an anticipated increase of 8% in 2024. Moreover, a new era has begun for silver after years of surplus supply as it moved to a deficit scenario. Industrial demand remains robust, driven by various sectors, notably photovoltaic panel installations, electric vehicles, and 5G/mobile technology.

In contrast, the demand for silver from ETFs and investment sources is more volatile, largely swayed by bond yields and the monetary policy expectations of the Federal Reserve and other central banks. The current market anticipation of substantial rate cuts by major central banks could support silver’s appeal in the financial sector.