Silver Price Forecast Q4 2024: Is Next Surge on the Horizon

Silver (XAG) has shown strength and positive price action throughout the first three quarters of 2024. Q3 2024 was a period of consolidation, forming a bullish price pattern. This bullish price pattern indicates positive momentum heading into Q4 2024. This article provides a fundamental and technical overview of the silver market to forecast its potential price movements in Q4 2024.

Emergence of Bullish Price Trends in the Silver Market

The silver market has experienced strong positive trends over the past few decades, as shown in the chart below. From the 1930s to the 1970s, the market showed consistent growth driven by a surge in global demand for industrial and monetary uses. This increased demand was attributed to the economic impact of the Great Depression, which prompted significant government intervention in precious metals. A key example of this intervention was the Silver Purchase Act of 1934. This was implemented to stabilize silver prices and stimulate the U.S. economy.

After World War II, economic recovery further drove industrial demand. Silver became crucial in various technologies, including photography, electronics, and currency production. In the 1960s, silver’s role as a monetary asset was reassessed, culminating in the U.S. government’s decision to reduce the silver content in coins, which led to a speculative boom. The market peaked in the late 1970s, driven by inflationary fears and the Hunt brothers’ attempt to corner the silver market.

The chart below shows that the silver market experienced over a 10,000% increase from the 1932 low to the 1979 peak. However, the subsequent price correction from this peak has formed a cup-and-handle pattern. These patterns are typically considered positive price developments, especially following the historic move in the silver market. The chart below is a line chart illustrating that the last few quarters of 2024 have shown an upward trend. This upward trend targets the price toward the $43 region in spot silver. Based on this positive price action, a breakout and yearly close above $43 will likely trigger the next strong surge in the silver market.

Evaluating Q3 2024 Price Trends and Developments

Similar patterns are observed using the candlestick chart below to further understand the historical bullish formation in silver. It is found that when the neckline of the cup and handle pattern is formed from the historical peaks, the neckline targets $50. The latest buy signals were observed in Q3 2022 and Q4 2022. These buy signals are indicated by the blue arrows in the chart below. These two buy signals have initiated the next upward move and target all-time highs at $50. The black trend lines highlighted in the chart also show that the silver market has broken out from the consolidation region and remains bullish.

The line chart shows a target of $43, while the candlestick chart shows a target of $50. Therefore, the price region between $43 and $50 forms a long-term strong resistance area. A yearly close above this price range will likely trigger the next strong surge higher. The Q3 2024 candle is positive and remains elevated, which indicates that Q4 2024 may be a positive quarter, targeting the $43-$50 region.

What to expect in Q4 2024?

The candlestick chart below illustrates silver price movements over the past three quarters. It shows that Q1 2024 and Q2 2024 were positive quarters, whereas Q3 2024 was a consolidation period that formed an inverted head and shoulders pattern. The lowest price level of Q3 2024 represents the head of this pattern.

The price now attempts to breach the key resistance level of $32.50. A break above this level would initiate the next strong move for Q4 2024. Despite Q3 2024 being a consolidation period, the quarterly close was higher. This strong quarterly close highlights silver’s underlying strength. This strength suggests that an upward breakout above $32.50 is likely.

Moreover, the chart below highlights the percentage of months silver closed higher than it opened from 2020 to 2024. It is found that October was the strongest month, with silver closing positive for the past 4 years. On the other hand, September has shown only a 40% probability of a positive monthly close. This indicates that prices may rise significantly if silver breaks above $32.50 and initiates the next strong move. Therefore, the monthly candle for October is likely to be positive.

While Gold (XAU) has initiated a strong rally in August and reached record highs, silver is still trading lower. Therefore, if silver begins its surge, it could catch up with gold’s movement to reach record levels. As a result, a break above $32.50 can trigger a significant price increase for silver in Q4 2024. Based on the chart below, a strong move in October 2024 may lead to a correction in November, followed by a rally in December.

Key Factors Driving Silver Demand Higher in Q4 2024

Growing Industrial and Green Energy Demand

Silver is poised to benefit significantly from its dual role as an industrial and precious metal in Q4 2024. One of the primary drivers of this increased demand is the rapid expansion of the green energy sector. This sector heavily relies on silver for high electrical conductivity and durability. The surge in renewable energy initiatives has created a robust demand base for silver. Moreover, silver’s role in battery production and charging infrastructure for electric vehicles will solidify its position as a critical resource. If the industrial output rebounds and supply chains stabilize, the heightened demand from these sectors could be a pivotal force driving silver prices higher in Q4 2024.

Central Bank Policies and Currency Dynamics

As of Q4 2024, the Federal Reserve is expected to continue its rate-cutting cycles. This action is in response to slowing economic growth and heightened recessionary risks. Dovish monetary policies exacerbate the weakening U.S. dollar. The U.S. Dollar has initiated a rebound in the short term. However, this rebound is likely to be capped by technical resistance, as the overall trend for the U.S. Dollar remains downward. This supports silver’s price due to its inverse correlation with the greenback.

This dynamic attracts speculative interest and enhances silver’s appeal as a hedge against currency devaluation. Additionally, as industrial activity picks up, China’s ongoing stimulus measures are set to increase demand for silver. These monetary and currency factors create a favourable backdrop for silver. These factors make silver an appealing investment choice in Q4 2024.

Supply Constraints and Market Sentiment

While demand dynamics play a crucial role, supply-side factors are equally important in the silver market outlook. In 2024, global silver mining production has experienced marginal declines due to several operational challenges. This contraction in supply, coupled with growing industrial demand, sets the stage for a potential supply deficit. Market sentiment also plays a role, as lower mining output heightens the perception of scarcity. These dynamics push investors towards silver as a safe-haven asset.

Moreover, the gold-silver (XAU-XAG) ratio has been declining from long-term resistance. Historically, a decline in this ratio signals a period of silver outperformance, indicating that investors are shifting their preference toward silver in anticipation of stronger price gains. The long-term continuation of this decline suggests further bullish momentum for silver. Overall, these supply constraints and favourable market sentiment will likely result in silver’s strength in Q4 2024.

Final Words

Silver has demonstrated strong bullish momentum throughout 2024, supported by technical formations and demand dynamics. Despite consolidation in Q3 2024, the emergence of inverted head and shoulders signals the potential for further upside in Q4 2024. A breakout above the key resistance levels of $32.50 would confirm the next move higher, potentially leading to a test of the all-time highs around $50.

Additionally, macroeconomic factors, including a dovish Federal Reserve policy and ongoing demand from green energy and industrial sectors, provide a solid foundation for silver’s strength in Q4 2024. Supply constraints and a weakening U.S. dollar further contribute to the bullish outlook. Moreover, geopolitical uncertainty in the Middle East fuels strength in the silver market. Investors can continue buying silver on dips, targeting $43 and $50 levels.