Long-term silver demand outlook remains positive

The silver price ended the past week with a strong decline of more than 2%. Another unsuccessful attempt to consolidate above the level of 23.2 could lead to a rapid price movement in the opposite direction. At the same time, a pullback of the white metal price to the level of 22 is an interesting opportunity for a set of long positions. Even taking into account the localized decline, in the long term the silver price has more than enough reasons for growth.

Last week, the Silver Institute presented an updated forecast for 2024. According to its estimates, demand will reach a new record of 1.2 billion ounces. The main reason for this, according to experts, will be an increase in global industrial consumption. A favorable factor for silver will also be a decrease in interest rates of the U.S. Federal Reserve. The supply will increase by 3% to 1.02 billion ounces, but it will still not be enough to eliminate the deficit of metal in the world market.

The high level of silver consumption will be supported by the active development of photovoltaic and other "green" technologies. In addition to industrial demand, the Silver Institute forecasts growth in consumer interest in white metal jewelry. India will account for the bulk of the growth in this area.

Peter Kraut from Silver Stock Investor is also optimistic about the white metal's prospects. In his opinion, just a few years ago, industry accounted for 50% of silver demand, and now this value has almost reached 60%. For 2023, industrial consumption of the metal increased by 8%, while the solar energy sector grew by almost 19%. At the same time, the largest silver producers are reducing production: Mexico has reduced volumes by 12%, and Peru has set a 20-year low.

On the daily silver chart it’s worth paying attention to the support located at 22.1. A strong upward movement has already started from it twice recently. It is worth fixing the profit when reaching the level of 23.2.

The following trading strategy can be suggested:

Buy silver when the price decreases to the level of 22.1. Take profit — 23.2. Stop loss — 21.8.

Traders can also use a Trailing stop instead of a fixed Stop loss at their discretion.