Silver prices (Symbol: XAGUSD) have been on an upward trajectory in 2024 with 21% year-to-date, making it one of the best-performing commodities this year. Silver has outperformed its metallic counterparts, gold and copper, as well as the S&P 500 index.
The image above shows the how silver has ralled in 2024, as observed on the VT Markets app.
Strong performance despite tough backdrop
Despite a challenging environment for precious metals, with high interest rates, tapering inflation, and a robust stock market, silver has surged to around $30 an ounce, its highest level since 2012. This rally is remarkable given the unfavorable conditions typically faced by precious metals in such an environment.
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Unique position as both precious and industrial metal
Silver price is driven given its unique position. The metal is crucial in various industrial applications, particularly in solar panels and semiconductor chips used in artificial intelligence (AI). The Silver Institute reported a record industrial demand in 2023, with a 64% increase in the solar panel industry alone. This demand is expected to rise by another 20% in 2024.
The push for global electrification and the growing demand for powerful semiconductor chips are significant tailwinds for silver. Its use in solar panels and AI technology highlights its importance in the modern industrial landscape.
To add on, the supply of silver from mining and scrap recycling fell by 0.5% in 2023 and is expected to decline by another 1% in 2024, according to the Silver Institute. This supply-demand imbalance is a key driver of the price appreciation of silver.
The price behaviour and market opportunities of silver
The price movements of silver are often more volatile than gold due to its smaller market size and seasonal trends. Historically, silver prices experience sluggish action in the summer and greater volatility in the fall and winter.
Given such volatility, silver provides a viable opportunity for day traders looking to profit from short-term price movements in the form of CFD trading. The frequent price swings offer numerous entry and exit points, making silver an attractive commodity for day traders.
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