CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75.00% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Silver is the second most popular precious metal among bullion traders. The white metal has been shining bright for centuries as a store for value, much like gold, reaching an 11-year high of $32.52 in May 2024. XAG/USD surged 23.33% and gained 17.89% in the 12 months to July 2024. And the good news doesn’t stop here. Silver is expected to outperform gold in 2024. The positive market sentiment has further pushed the demand for silver.
Here’s a look at the factors fuelling the demand and how commodity traders can make the most of the opportunities in silver trading.
Silver is used for a multitude of purposes, which are supporting its demand:
Silver is one of the most used metals for industrial fabrication. These include electronics, automotive industries and photovoltaic (PV) cells for solar panels. The global industrial demand for XAG is forecast to see an uptick of 4% in 2024. The growth of the solar energy sector is expected to lift the demand for N-type solar cells, which primarily use silver. The expansion of the electronic vehicle (EV) sector may also push the demand for the white metal for battery and charging needs.
With the gold rally, the jewellery market is shifting towards silver. This underpins the growth of silver consumption among top jewellery consumers, including India. The country that loves gold is expected to drive 9% growth in the global silverware fabrication market in 2024.
The global silver recycling volume is forecast to recede by 3%, hitting multi-year lows. This is due to reduced silver jewellery, silverware and photographic waste. Further, silver production, as a by-product from the mines of other base metals, is also forecasted to affect supply, creating a deficit in the market. However, the recycling supply deficit is expected to be overshadowed by the uptake in mining production. Overall changes in the supply chain may further support the silver price rally.
Silver gained 2% after the US employment report for June 2024. Further, Federal Reserve chair Jerome Powell announced that the central bank was now more inclined to cut back key repo rates. Traders’ expectations of monetary easing by September 2024 reached 100%, weighing on the US dollar. Known as a low-cost safe haven, silver registered gains. Going ahead, this sentiment is set to push the precious metal market further, lending support to the ongoing silver rally.
There are several reasons for exploring the opportunities presented by the white metal in the commodities market:
Solid demand and supply-side constraints are expected to support the silver rally. Simultaneously, geopolitical uncertainties and US interest rate decisions will continue to add volatility to the white metal’s price. Consequently, analysts at JP Morgan and Citigroup have forecasted that XAG/USD could hit the $30 mark in 2024. This is set to create a wealth of opportunities for commodity traders. Add the following to your market analysis arsenal to make the most of such opportunities:
In addition to technical indicators and news updates, experienced commodity traders use the silver-to-gold ratio to speculate on movements in the silver market. It refers to the amount of silver required to buy 1 oz of gold. The silver-to-gold ratio is an important parameter in making silver trading decisions. Experts use this to determine whether silver is under- or over-valued in comparison to gold. This is because silver tends to follow gold. The expectation for the white metal to sustain its rally is higher after gold’s impressive performance in 2023.
Technical analysis is a key tool to make commodity trading decisions. The pattern from 1980 to 2024 indicates a bullish breakout for the white metal. Silver prices are closing in, forming a cup-and-handle pattern, a strong indicator of a bullish breakout. However, traders must stay cautious of fake signals as the market tests the key resistance level ($31, in the case of silver), multiple times before a breakout.
Trading silver via CFDs allows you to optimise returns from both rising and falling markets. CFDs are derivative instruments that help you trade with margin, increasing your purchasing power with a small amount of capital. This increases your profit potential but also magnifies the loss potential. Therefore, risk management is crucial while trading silver using CFDs.
Disclaimer
All data, information and materials are published and provided “as is” solely for informational purposes only, and is not intended nor should be considered, in any way, as investment advice, recommendations, and/or suggestions for performing any actions with financial instruments. The information and opinions presented do not take into account any particular individual’s investment objectives, financial situation or needs, and hence does not constitute as an advice or a recommendation with respect to any investment product. All investors should seek advice from certified financial advisors based on their unique situation before making any investment decisions in accordance to their personal risk appetite. Blackwell Global endeavours to ensure that the information provided is complete and correct, but make no representation as to the actuality, accuracy or completeness of the information. Information, data and opinions may change without notice and Blackwell Global is not obliged to update on the changes. The opinions and views expressed are solely those of the authors and analysts and do not necessarily represent that of Blackwell Global or its management, shareholders, and affiliates. Any projections or views of the market provided may not prove to be accurate. Past performance is not necessarily an indicative of future performance. Blackwell Global assumes no liability for any loss arising directly or indirectly from use of or reliance on such information here in contained. Reproduction of this information, in whole or in part, is not permitted.
