XAG Heading for $35 on Increased Physical Silver Demand

Gold has been on steroids this year, surging around $700 higher but Silver hasn’t remained behind, pushing above the high from 2020-2021 when markets were all over the place. Silver’s value has appreciated around 50% since the start of 2024, while Gold has only gained around 30%.

Over the summer, silver experienced a $6 decline, but the price found strong support at the 20-week SMA (gray), signaling a reversal. Two large bullish candlesticks followed by doji candlesticks above the moving average suggested a bullish reversal. Over the past two months, there has been strong upward momentum, showing that buyers are confident in keeping silver prices above the 2020-2021 highs. Given ongoing demand for safe-haven assets due to global economic and geopolitical concerns, another move toward $35 seems likely after yesterday’s brief pullback.

Silver Chart Monthly – MAs Have Turned Into Support

Increased Silver Demand from Russia and the EV Sector

Rising international tensions and the expansion of the electric vehicle (EV) sector, which relies heavily on silver, have driven demand. This is evident in the UAE’s massive increase in silver imports, which surged from $29 million in 2022-2023 to $1.7 billion in the most recent fiscal year. Russia has also shifted its stance on precious metals, adding silver to its state reserves alongside gold, platinum, and palladium. This strategic move by Russia, detailed in its Draft Federal Budget, reflects a broader trend of central banks rethinking the value of silver.

Future Outlook and Market Deficit

With growing physical demand for silver and the likelihood of continued supply shortages, the global silver market could remain in deficit in the coming years. As above-ground inventories dwindle, investor interest in silver should increase, providing fundamental support for higher prices. This shortage is expected to act as a tailwind, helping maintain upward pressure on silver’s market value.

Silver Live Chart