Silver Price Forecast: Will the Metal Test New Highs in 2024?

In the third week of May, silver finally made a meaningful rebound, surging to its highest level in more than 11 years at $32 per ounce (oz). The precious metal had struggled to recoup its losses since its continued decline from an all-time high of $49.51 per troy ounce (oz) in April 2011.

Even in 2023, despite gold – silver’s more popular rival – repeatedly breaking its own record price, silver traded within a range of $23.5/oz to $26/oz throughout the year, although it typically follows the price of gold. The highest price for silver in 2023 was $26/oz, below its peak during the COVID-19 pandemic of about $28/oz.

A combination of geopolitical concerns, such as wars in Ukraine and the Middle East showing little sign of abating, expectations of a US interest rate cut, and China’s latest measures to bolster its lackluster economic recovery, has fueled a silver price rally.

Silver, often termed “poor man’s gold” due to its affordability, offers an alternative investment to traditional assets and serves as a hedge against inflation with its historical value preservation. Its extensive use in industrial applications, including electronics and renewable energy, also positions it to benefit from increasing industrial demand.

At the time of writing, silver price has gained more than 22% so far in 2024, outperforming gold, which has risen about 13% year-to-date (YTD).

Will silver be able to maintain its lead over gold? In this article, we explore the silver price forecast for 2024 and beyond, taking into account its latest development and factors affecting its price.

Silver Price Forecast Summary

Silver Price Performance in 2023

In line with gold, the silver price had strengthened throughout 2023, on concerns about looming recession and expectation that the US Federal Reserve would ease its monetary tightening.

At the start of 2023, silver price continued its rally from the last quarter of 2022, opening strong at over $24/oz, trading between $23 to $25/oz before peaking at more than $26/oz in May 2023, the highest since April 2022.

The course of the Fed’s monetary policy, just as in gold, was the most influential factor in the silver price movement. The Federal Reserve’s aggressive monetary policy, which began in March 2022, strengthened the US dollar against other currencies and raised bond yields, putting pressure on non-yielding assets such as gold and silver.

In September 2023, the Fed decided to pause interest rate hike, keeping the benchmark Federal Fund Rate target range at 5.25% to 5.50%, and has kept it unchanged since then as the inflation rate cooled.

In July 2023, the US inflation rate rose 3.2%, slowing from 4.9% in April 2023 and down from the highest in four decades at over 9% reached in 2022.

It raised hopes that the US central bank would eventually begin its rate cuts.

For overall 2023, the silver price was relatively unchanged compared to a 2.9% gain in 2022.

Silver Price Analysis: Factors Affecting the Metal in 2024

At the start of 2024, the silver price struggled to maintain its gains due to anticipated slowing industrial demand. Additionally, stronger-than-expected US inflation in January cast doubt on the prospect of an early interest rate cut by the Fed.

However, the precious metal began to rally in the second quarter, even as it became clear that the US Federal Reserve intended to maintain higher interest rates for a longer period.

Before we jump to the silver price predictions, let’s quickly recap factors that may influence the price of the precious metal in 2024.

Fed’s Rate-Cutting Cycle May Begin in September

Gold and silver investors have been on the edge of their seat, eagerly anticipating the US central bank to begin easing its monetary policy.

Initially, markets anticipated that the Fed would start to cut the interest rate as early as March. However, the resilience of the US economy amidst high interest rates and inflation rates that have not yet cooled to the Fed’s desired level has prevented the Fed from swiftly changing course.

The Consumer Price Index (CPI) in the world’s biggest economy rose by 3.3% in May, a slight slowdown from 3.4% in April, the US Bureau of Labor Statistics (BLS) announced on June 12. It was also still higher than the Fed’s 2% inflation rate target.

The US labor market also remained high. In May, the US added 272,000 new jobs, a surge from 165,000 in April, BLS announced on June 7. May’s data also beat economists’ expectations of 185,000 to 190,000 new jobs, according to a report by CNBC.

J.P. Morgan wrote in a note on June 10:

“Our strategists’ view is that the May jobs data underscores the idea that the economy remains stronger than many people might think. And the Fed will need to see further confirmation in economic data that the economy is cooling before considering rate cuts later this year.”

Analysts now expect that the Fed may begin its rate-cut cycle in September. A lower interest rate could encourage businesses and individuals to spend more, lifting demand for goods and services, including commodities.

James Knightley, Chief International Economist at Dutch bank ING, wrote on June 7 that the Fed may initiate a rate cut if it sees evidence of core inflation easing, a slack in the job market, and softening consumer spending.

Knightley said:

“So, if we get the combination of cooler inflation, a looser jobs market and stalling consumer spending growth we believe the Fed will indeed look to move monetary policy from ‘restrictive’ to ‘slightly less restrictive’ with 25bp rate cuts at the September, November and December FOMC (Federal Open Market Committee) meetings.”

According to the CME FedWatch Tool, as of 17 June 2024, the probability of the Fed keeping the interest rate unchanged at 5.25-5.5% in the next meeting in July is still high at 87.6%. For the September meeting, the probability of the US Central Bank cutting rate by 25 basis points is 62.03%

Solar PV Expansion to Support Silver Demand

Apart from its use as an investment, silver is a strategic metal with a wider range of industrial and medical applications compared to gold. Only 10% of gold output goes to industrial use, while over 50% of silver production is used in industrial applications.

Because of its industrial usage, silver prices are very susceptible to worldwide economic activity. Slowing economic growth can decrease demand for new building construction and vehicle manufacturing. As a result, slow economic growth could reduce demand for silver.

The Silver Institute projected that industrial demand to grow by 4% to a new record high in 2023, led by demand in the green economy, such as investment in solar photovoltaic (PV), power grids, and 5G networks.

In 2024, the Silver Institute forecasts global silver demand to rise by 2%, benefiting from the continued strength of industrial uses. The institute expected industrial fabrication to rise by 9%, reaching another all-time high, propelled by an anticipated 20% in the PV market and a healthy offtake from other industrial segments. A recovery in the demand for jewelry and silverware will further increase the demand for silver.

According to the International Energy Agency (IEA), solar PV remained the main driver of global renewable capacity expansion in 2023, accounting for 65% of renewable energy growth. In 2024, the IEA forecasted that global solar PV was set to grow by over 7%, reaching 310 gigawatts (GW).

With such growth, ANZ Research estimated an 8% YoY increase in silver offtake in the solar sector.

China, the world’s second-largest economy, has been the primary driver of demand for most basic and precious metals. According to the International Energy Agency (IEA), China accounts for more than 60% of global electric vehicle sales.

The country also accounted for over 95% of global solar PV manufacturing capacity at 450 gigawatts (GW) in 2022, data from IEA showed. The agency predicted global solar PV manufacturing capacity to double in 2023 and 2024, with China again taking up 90% of the increase.

Tom Bailey, head of research at HANetf, the issuer of the Sprott Energy Transition Materials UCITS ETF (SETM), shared a similar outlook. The SETM ETF provides exposure to miners of energy transition materials such as silver, copper, cobalt, and nickel.

Bailey told Techopedia by email on June 14:

“Demand for silver should increase as countries continue to pursue decarbonization policies. Silver is important for solar photovoltaic panels due to its high electrical conductivity and thermal efficiency.”

He went on to say that the increasing adoption of electric vehicles (EVs) is expected to drive silver demand, given its higher utilization in EVs compared to conventional cars.

“We believe these are long-term drivers of silver demand and, therefore, price,” he said.

Undersupply to Persist

Silver, like gold, has a limited supply, which provides solid fundamentals because supply often lags demand. Pure silver mines are rare as the metal is often found along with other minerals, such as copper, zinc, and aluminum.

In 2023, global silver mine production fell by 1% to 830.5 Moz after a labor strike resulted in a four-month operation suspension at Newmont’s Pe?asquito mine in Mexico, the leading silver mining country, according to the Silver Institute.

The institute forecast that the total silver supply is likely to continue decreasing in 2024 by a modest one percent. As a result, the precious metal market will see a projected deficit of 215.3 Moz, the second-largest deficit in more than 20 years. In fact, the Silver Institute’s data showed that the market has been undersupplied since 2021.

In January, the industrial group warned that silver output faces risks from the suspension of zinc mines due to weak prices.

Sharing a similar projection, ANZ Research expects the market deficit to widen to 138Moz in 2024, as supply growth is insufficient to meet annual demand.

The markets and economic research subsidiary of the Australian lender ANZ estimates that silver mine production will rise by 3% YoY to reach 867Moz in 2024, while demand is expected to be around 4-5%.

“This market deficit is likely to drive further withdrawals from inventories, supporting prices,” said ANZ Research’s Senior Commodity Strategist Daniel Hynes and Commodity Strategist Soni Kumari in a note on April 16.

According to London Bullion Market data, silver volume held at LBMA vault has continued to deplete. Silver inventories have dropped to below one million troy ounce since June 2022. As of May 2023, LBMA vaults store 832.15Moz of silver, dropping 1.9% from a year ago at 848.63 Moz.

Renew ETFs Silver Investment

ANZ Research’s Hynes and Kumari anticipated that the prospect of the Fed starting its easing cycle in H2 2024 and a dramatic rise in gold prices will likely boost the investment demand for silver exchange-traded funds (ETFs) after investors ditched silver-backed ETF holdings in 2022 and 2023 due to aggressive monetary tightening.

According to ANZ Research, the disinvestment of silver-backed ETFs reached 137 million ounces in 2022 and 45 million ounces in 2023. As of the date of this publication, tactical investors have added 160 million ounces of fresh longs.

Hynes and Kumari said:

“We believe strong industrial demand and deficit in the market, along with rising gold prices, will pave the way for further acceleration in ETF purchases through this year and beyond.”

Baily of HANeft also agreed, saying:

“Demand for physically-backed silver ETFs may be constructive to silver prices. Demand for silver ETFs increases demand for silver. But it should also be kept in mind that silver is also an industrial metal.”

Silver Price Forecast 2024: Is Silver a Good Investment?

For 2024, most silver price predictions are still bullish, although the price is unlikely to surpass its all-time high.

Wahyu Laksono, the founder of the Jakarta-based trader community Traderindo, has raised his silver price forecast to $30-$40/oz for 2024 through 2025, up from his previous projection of $17 to $30 in February.

He told Techopedia on June 14:

“While, in general, the Fed is still reluctant to cut the rate, it is just a matter of time. Therefore, the US dollar has the potential to eventually.”

ANZ Research’s silver price forecast saw the metal trade at $31/oz by the end of 2024, bringing its average price to $27.2/oz for the year on anticipated widening supply deficit, stronger investment flow, and industrial demand.

However, the bank anticipated the precious metal could see a correction to $25.50/oz in the near term as resilient US economic data and the risk of slow disinflation progress lifted the US dollar and US treasury yield.

ANZ Research’s Senior Commodity Strategist Daniel Hynes and Commodity Strategist Soni Kumari wrote in a note on 16 April:

“Theoretically, a stronger US dollar and higher US yield are headwinds for gold and silver prices as both reduce investors’ appetite for non-yielding bullions. The current dichotomy in markets is that rate cut expectations are getting pared down, even as gold and silver prices continue to scale record heights.”

Economic data provider Trading Economics predicted silver to trade at $31.074/oz by the end of Q2, rising to $31.752 in Q3 and $32.442 in Q4 2024, as of June 17.

In its silver price predictions in April, the World Bank saw silver to reach $25/oz in 2024, up from $23.4/oz in 2023, driven by both industrial and investing demand.

The World Bank said:

“Industrial demand, which accounts for almost half of global silver consumption, continues to be supported by expanding vehicle electrification and renewable energy infrastructure, and will likely be further boosted by a recovery in jewelry and silverware demand. Investor interest in silver is set to be bolstered by advanced-economy interest rate cuts later this year.”

Investing Haven expected silver to trade around $28/oz in 2024. Once silver breaks the $28 level, the metal could test the $32 to $36 level, which the price forecasting website expected to happen in H1 2024. For overall 2024, it projected silver to average $34.7/oz.

J.P. Morgan expected silver to trade around $30/oz in the fourth quarter of 2024, following gold’s uptrend supported by The Fed’s cutting cycle and falling US real yields.

In its latest silver price forecast 2024 on June 13, ING expected the price of the white metal to trade at $27.50, up from $23.50 estimated in February.

Summary: Silver Price Predictions for 2024

Silver Price Forecast 2025

The silver price forecasts for 2025 suggested that the precious metal will continue its upward trajectory, with sources revising their predictions upwards from previous estimates.

Daria Efanova, Head of Research at London-based Sucden Financial, said without giving a price forecast:

“For 2025, we also see little room on the downside. A continued reduction of interest rates is likely to prop up the upward momentum for silver. Any economic growth deceleration is also expected to lift price performance, with the metal’s safe-haven attributes coming into play.”

She added that while global industrial expansion, particularly in China, and increasing demand for jewelry from key consumer regions could further boost silver’s upward trajectory, macroeconomic factors will remain crucial in determining the metal’s movement.

On June 13, ANZ Research revised upward its silver price forecast for 2025 to $33.2/oz from its February estimate of $25.3 for the year.

ING has also lifted the silver price prediction for 2025 to $28.5/oz from its previous forecast of $23.50/oz for the year.

The World Bank estimated silver to rise to $26/oz in 2025 from $25 in 2024.

Wahyu Laksono, the founder of the Jakarta-based trader community Traderindo, has raised his silver price forecast for 2025 to a range of $30-$40/oz from his previous projection of $20-$35/oz in February.

“Silver’s performance is closely linked to the health of the global economy due to its broad industrial applications. It is less susceptible to geopolitical and safe haven impacts compared to gold, which partly explains why gold’s performance has declined in the past few years. Silver has the potential to outperform gold.”

Summary: Silver Price Predictions for 2025

Long-Term Silver Price Forecast 2030

Most analysts did not provide a silver price forecast for 2030 due to various factors that might affect its price, making long-term projections inaccurate.

Dutch lender ING expected the silver price to ease to $27/oz in 2026, but it did not offer the silver price prediction beyond that year.

Meanwhile, Laksono predicted silver could trade between $40 and $50 in the long term. However, he warned that the state of the global economy could present a downside risk for silver.

He told Techopedia:

“If an economic crisis happens, silver could drop again because industrial demand will weaken.”

Coinpriceforecast also offered a longer-term silver price forecast.

The price forecasting website projected the silver price to reach $39.55/oz in 2026, soaring to $89.3/oz in 2030 as of June 15, surpassing silver’s record high of nearly $50 in April 2011. The website did not provide a reason for the jump in the price of silver.

The Bottom Line: Is Silver a Good Investment?

Analysts mentioned in this article predicted the silver price could remain elevated – potentially outperforming gold – in the long term underpinned by industrial demand, particularly from automotive and transition energy race, which boosts demand for solar panels and electric vehicles.

The Fed’s rate-cutting cycle could provide a further boost to silver.

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