Silver price constrained in narrow range amid industrial demand concerns
Silver hovers near $29.65
Silver has found itself at a crucial price juncture as the market enters a period of uncertainty, with its near-term price action dominated by the $29.65 resistance level.
Following the slight recovery from a 3-month low of $28.75, silver's price has been confined to a narrow range of $29.40 to $29.86 for the past five days, suggesting a critical crossroads for the precious metal's direction. This tight price band, marked around the $29.65 level, could either pave the way for a further recovery or signal a potential decline.
Silver price dynamics (December 2024). Source: TradingView.
The recent price action is a reflection of multiple crosscurrents impacting silver. On one hand, its dual nature as both a precious metal and an industrial commodity presents a mixed outlook. While easing inflation concerns have provided support to precious metals, silver's performance is being hindered by uncertainties surrounding industrial demand, particularly from China’s solar panel sector. Overcapacity issues in this key industry have reduced silver’s input demand, which, in turn, has dampened silver’s price potential despite broader economic uncertainties.
Silver price forecast: $29.65 resistance crucial for near-term direction
As silver struggles to break free from the confines of the $29.65 resistance level, the technical outlook provides some hints about the next move. The Relative Strength Index (RSI) on the 4-hour chart remains above the neutral 50 mark, suggesting that recovery attempts are still possible. However, the price's failure to break above the $29.65 level could increase the chances of a downward move, especially if the broader market sentiment shifts in favour of the US dollar or higher interest rates, both of which could undermine the appeal of silver as a non-yielding asset.
While the market may be in a holiday lull with limited price action, this period of thin liquidity could be exaggerating the next moves in silver prices. The market’s focus will likely be the key resistance level of $29.65. Whether silver can maintain its upward momentum or face another round of declines will depend on technical signals, broader market conditions, and shifts in industrial demand, particularly from China.
Silver prices dropped to $28.75 per ounce after breaking below the critical $29.65 support level. The metal briefly rebounded, retesting $29.65, which now acted as resistance.
