(Kitco News) - Comex silver futures prices in December hit a six-month high of $25.935 an ounce. The silver market in 2024 will likely see more upside, with a challenge of $30.00 very possible. Silver will likely continue to be supported by a depreciating U.S. dollar on the foreign exchange market, major central banks leaning easier on their monetary policies, and on safe-haven demand. Silver next year will continue to take its cues from big brother gold.
The U.S. dollar index recently hit a four-month low and prices are trending lower, to suggest still more downside pressure on the greenback in the coming weeks, or longer. The U.S. economy appears to be in a “goldilocks” position at present—whereby inflation is cooling and the economy appears to be growing steadily but is not too hot. The above factors should continue to favor the precious metals market bulls for at least the early of the coming new year. The latest PCE price inflation data released on Friday, Dec. 22, reassured traders and investors that U.S. inflation continues to cool. Cooling global inflation and less-restrictive central bank monetary policies suggest better global economic growth and in turn increasing demand for metals, including silver.
The potential bearish elements for the silver market in the coming months could be continued anemic economic growth in China, the world’s second-largest economy. Recent economic data out of China has been mostly downbeat, including a very troubled housing and property sector. China is a major consumer of metals.
Importantly, another bearish factor for the silver market is down-trending crude oil prices at present. In mid-December Nymex crude dropped to a nearly six-month low of $67.71 a barrel. Oil prices have rebounded from the December low but remain in a downtrend. As long as raw commodity sector leader crude oil sees its prices trending lower, any rallies in other commodity markets, including silver, will very likely be limited.
The new year will find silver traders continuing to closely scrutinize the monetary policies of the major central banks of the world. Any resurgence of global inflation in 2024 would find the central banks quickly putting the brakes on their just recently more accommodative tone on money policies.
The recent Houthi missile and drone attacks on random ships in the Red Sea have prompted some renewed inflation worries. And there are also worries about drought impacting the Panama Canal. Barrons has reported “ocean freight rates are surging, putting pressure on companies that rely on cheap shipping.” A U.S.-led military contingent is set to guard the Red Sea shipping route, but major shippers are leery that the contingent can stop every attack. While the re-routing of ships is occurring and is prompting higher shipping rates and much longer routes, it’s not likely the situation by itself will cause a resurgence in serious price inflation. That’s good news for silver bulls. Decades ago, silver and gold were seen as price-inflation hedges. However, the recent bout of significant global price inflation provided little price benefit for the gold and silver bulls.
In the coming weeks and few months, and barring any unexpected geopolitical flare-up, I see silver prices trading in a sideways range between $21.00 and $28.00. A challenge of $30.00 an ounce in silver is in play for 2024.
The monthly continuation bar chart for nearby Comex silver futures is in a neutral posture, as trading has been sideways and choppy for the past around three years.
