Silver Price Prediction: Silver Has Outperformed Gold, Outlook Brighter

Summary:
• Silver price hit its all-time over a decade ago, and its returns outweigh gold's this year. It will likely finish the year stronger too.

Silver Price continues to hover near the $32 per ounce mark as investors seek to bolster their defenses against a weaker US dollar and rising probability of another Fed interest rate cut. The greyish metal traded at $31.92 per ounce on Wednesday, having retreated by -0.5 percent as of this writing.

Silver also has its demand outlook strengthened following China’s move to announce a strong monetary stimulus on Tuesday. Silver’s industrial demand has been weakened this year as the world’s second-largest economy struggles with reduced industrial output and battered property market.

However, the People’s Bank of China (PBOC) announced a raft of strong stimulus measures on Tuesday. The central bank lowered benchmark interest rates to 1.5 percent from 1.7 percent, reduced reserve reference ratio by 0.5 percent, lowered interest rates on existing mortgages by 0.5 percent and reduced the minimum deposit requirement for first-time home purchases from 25% to 15%.

A reinvigoration of China’s economy will certainly be felt in the broader global economy, and silver stands to gain thanks to its usage in multiple industrial processes. Meanwhile, the US dollar continues to weaken as the prospect of another Fed interest rate cut rises. The DXY index which weighs the dollar against six other major currencies, is near year-to-date lows at 100.52.

A weaker USD favours silver price as investors seek to diversify their safe haven assets with a blend of precious metals. Silver has outperformed gold this year, with YTD gains of 33.9 percent against the yellow metal’s 28.7 percent as of this writing. If China’s economy responds positively to the stimulus, then silver could record a new all-time high in the coming weeks.

Silver price prediction today

The bulls have recently taken control of the silver price momentum, with the pivot likely to be at $31.88. Action above that mark will favour the buyers to take control. The upward momentum will likely encounter resistance at $32.32, but extended bullishness could break above that level to test $32.60.

On the other hand, the downside will likely prevail if the price breaks below the $31.88 level. In that case, the first support could come at $31.44. However, if the downside momentum strengthens, the price could break below that mark to test $31.00.