Silver Needs To Hold Crucial Support At $30/oz To Maintain Long-Term Bullish Trend

(December 18, 2024 - Ernest Hoffman, Kitco)

(Kitco News) – While silver’s longer-term demand projections support higher prices, in the near term the gray metal faces a test of key support levels, and this afternoon’s Federal Reserve announcement will likely determine its immediate price direction, according to independent analyst Damian Nowiszewski.

Nowiszewski wrote on Wednesday that silver is struggling to maintain its year-end gains amid increasingly hawkish signals from the Fed. “Despite strong long-term fundamentals supporting silver's upward trajectory, the precious metal faces a challenging short-term outlook, with key technical levels in focus,” he said.

“Over the past year, the narrative around silver pricing has remained largely unchanged. Analysts and forecasts continue to point to long-term growth, driven by rising demand from industries such as electromobility, renewable energy, and defense,” the analyst noted. “With supply remaining relatively constant, this growing demand fuels optimism for silver’s future. This trend is expected to persist into 2025, keeping long-term bullish sentiment intact.”

In the short and medium term, however, silver’s price remains very vulnerable to market fluctuations, especially given current liquidity conditions. “Right now, the bulls are on the defensive, and all eyes are on the crucial $30 per ounce support level.”

Nowiszewski said today’s Federal Reserve meeting is the last major market event of the year, and it has the potential to drive silver prices through this crucial support level.

“While a 25bp rate cut is anticipated, the real focus will be on the tone of the Fed’s statement,” he wrote. “If Chairman Jerome Powell’s recent comments hold—indicating that the Fed won’t rush to cut rates—the short-term outlook for silver could lean bearish, putting additional pressure on prices.”

If the Fed adopts a more neutral stance, Nowiszewski believes this could lead to consolidation within the $30 to $31 per ounce range through the end of 2024. “Traders might consider positioning for a sideways trend, as a lack of clarity could prevent a decisive breakout in either direction,” he said.

The bigger question is whether silver’s long-term uptrend can survive short-term price pressures.

“Looking beyond the immediate volatility, silver remains in a long-term uptrend that has been in place since April 2020,” Nowiszewski noted. “Despite occasional pullbacks, the overall trend has been higher, with recent price action reflecting a battle around key resistance levels.”

“A deeper correction in silver would likely find significant support near the $30 per ounce mark, where a cluster of support levels and an upward trend line intersect,” he added. “This area should provide a strong defense against further declines.”

Nowiszewski said that in the near term, silver prices are experiencing downward pressure, and the $30 support level is likely to be tested again. “If this support fails to hold, the next target for sellers is the $28 per ounce region,” he said.

On the other hand, if the silver price manages to break through resistance at $33.30 per ounce, this could invalidate the current bearish momentum and open the door to a stronger rally.

Silver has been in steady decline throughout Wednesday’s trading session, with the spot price testing support just above the critical $30 per ounce level multiple times ahead of the Fed’s 2 p.m. EST rate decision.