Silver (XAG): Industrial Demand Boosts Silver, but Price Faces Pressure Below $31.25
LONDON (October 15) Despite a surge in the Shanghai silver premium, which signals robust domestic demand, silver (XAG/USD) continues to face downward pressure. Trading around $31.12, the metal hit an intraday low of $30.76 as traders recalibrated expectations for a significant interest rate cut from the Federal Reserve in November.
The strengthening U.S. dollar, coupled with waning investor confidence in fiscal stimulus from China, has led to a bearish outlook for silver.
The Role of Silver in the Global Energy Transition
Silver plays a crucial role in the global energy transition, particularly in producing solar panels and electric vehicles. Industrial silver demand, expected to rise by 9% in 2024, continues to drive the market.
This demand, especially for photovoltaic panels, has pushed silver prices higher, surpassing $32 per ounce for the first time in a decade.
Mexico, the world’s largest silver producer, contributes 25% of the global supply. Companies like Mithril Silver and Boab Metals are actively exploring new silver projects, underscoring the growing importance of this precious metal in clean energy technologies.
Shanghai Silver Premium and Global Market Impact
The Shanghai silver premium, a key indicator of China’s domestic demand, has surged from 2% to 13.7% over the past year. This reflects rising demand from China’s photovoltaic industry and hints at potential global price volatility.
As silver holdings in ETFs decline, China’s growing industrial demand is outpacing global supply, potentially pushing international prices higher.
In conclusion, the rising Shanghai silver premium highlights China’s significant role in shaping global silver markets, with demand likely to influence prices well into 2024.
Investors should prepare for potential supply disruptions and increased volatility as silver remains integral to the energy transition.
Short-Term Forecast
Silver (XAG/USD) remains under pressure, trading at $31.12. Immediate support lies at $30.90, with resistance at $31.27. A break below support could drive further declines.
FXEmpire
