Here’s why silver is stalling; Can it break out in 2024?

Gold and silver typically correlate in price movements, yet silver has trailed behind gold in recent years. The bullish trend for gold commenced in 1999, and although the rise of the precious yellow metal was not without fluctuations, each correction presented a favorable buying opportunity.

Silver is the most volatile among precious metals, exhibiting substantial percentage movements during trends. Furthermore, even within a range-bound scenario, silver can deliver significant percentage fluctuations.  

For 2023, silver futures have experienced lows at $19.83 and highs at $26.20 per ounce, as per data from TradingView on December 13.

March silver futures climbed to $26.34 per ounce on December 4 but encountered resistance, prompting a loss of upward momentum. By December 12, the price had retreated to the $23 level following a bearish reversal that nullified the December 4 rally and triggered another correction.

As 2023 concludes, silver exhibited the narrowest trading range since 2019, where the spread between the high and low was $5.295 per ounce. Overall, 2023 marked a consolidation phase for the silver market, with prices predominantly staying above $20 per ounce.

Could 2024 be a breakout period for silver?

As silver is overdue for the explosive breakout, there is a prospect of it happening in 2024, in case several events or conditions that usually spell gains for this precious metal occur.

Consolidation often precedes a technical breakout, and both gold and silver have sustained bull markets for over two decades, favoring long-term upward trends.  

The prospect of stable to lower interest rates in 2024 is expected to support higher prices for both precious metals. Geopolitical events causing uncertainty tend to be bullish for gold and silver, historically serving as the world’s oldest means of exchange.

The demand for silver in industrial applications continues to rise, with the Silver Institute projecting an 8% growth to a record 632 million ounces in the current year. Key drivers behind this surge include investments in photovoltaics, power grids, 5G networks, consumer electronics expansion, and vehicle output increase.

2024 outlook

A sustained trend of higher highs in gold prices is anticipated to boost silver’s investment demand, a critical factor influencing the path of least resistance for prices. 

While technical resistance for silver is positioned just above the $30 per ounce level, reflecting the early 2021 high. A breakthrough at this level will likely trigger a surge in trend-following, speculative, and investment buying.

As of December 13, the monthly historical gold volatility stood at 14.4%, while silver registered a higher metric at 29.43%. With silver’s price variance being over double that of gold, the metal is expected to amplify the percentage-based movements of yellow metal, indicating a potential increase in its price action.