Commodities Analysis & Opinion

Why Silver May Be Poised to Outshine Gold in 2024

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  • Gold prices have remained stable despite a hawkish Fed.
  • Meanwhile, silver price forecasts for this year are anticipating a big spike in demand.
  • So, will grey metal be a better option for precious metal investors in 2024?
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At the beginning of the year, analysts and experts have been forecasting a bullish year for gold and silver.

These forecasts anticipate an uptick in the value of both metals, particularly in the context of potential dovish shifts in monetary policy by major central banks like Fed and ECB.

Silver, in particular, is seen as having greater potential, driven by the expectation of increased demand, especially from the industrial sector.

From a technical standpoint, both gold and silver have kicked the year off trading sideways, potentially setting the stage for a breakout in the medium term.

The periodic strengthening of the US dollar has been the primary hindrance to a potential new bull market, making further signals from the Federal Reserve crucial in the coming months.

In terms of gold, the World Gold Council’s report for 2023 indicates a demand and supply balance of 3%, suggesting that the market is stable.

However, the substantial outflow from ETFs is impacting the entire investment sector.

Gold ETF Holdings

Persistently high inflation and economic slowdown limit opportunities for individual investors to allocate spare funds to ETFs.

On top of that, the introduction of Bitcoin ETFs on January 10 adds new competition to the landscape, potentially impacting investor choices in the second half of the year.

Silver, according to an analysis by the Silver Institute, anticipates a global demand surge to 1.2 billion ounces in the coming year, marking the second-best result ever.

Growth is expected in the industrial sector, with a significant focus on jewelry demand in India. London Stock Exchange Group (LON:LSEG) forecasts project silver reaching as high as $30 per ounce by year-end.

Both gold and silver share a common trajectory, featuring ongoing consolidation in the first half of the year.

The activation of demand factors hinges on the Federal Reserve’s initiation of interest rate cuts and a potential economic recovery, particularly in Europe.

Gold, Silver: Technical View

The consolidation of gold prices since the start of the year has taken the form of a triangle formation.

The breakout from this pattern is poised to determine the short-term direction, with the demand side holding a higher probability, targeting new historical highs. Gold Daily Chart

On the flip side, a potential decline provides opportunities to join the long-term trend at a more favorable price, with the initial target in the price range of $1980 per ounce.

Meanwhile, silver also shows narrowed ranges, consolidating within the $22-23.50 per ounce range.

If the retreat extends further south, investors should focus on a robust demand zone within the $21 per ounce range.

Silver Daily Chart

An upward breakout from the current consolidation would signal there’s lot more to come, paving the way for a retest of $26 in the long term.

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