XAG/USD (Silver) Fundamental Analysis + Forecast 1/29

I've been watching silver prices closely, and they've been hovering around $24 per ounce so far this year. On January 16th, the price briefly touched a nine-month high of $24.4, helped by a weaker dollar and expectations of easier monetary policy. There have been signs of lower inflation and recession concerns, which have fueled speculation that the Federal Reserve may stop raising its funds rate at 5%. Recent data shows that annual PCE core inflation has continued to slow, and personal spending has contracted for a second straight month. These developments have made non-interest-yielding bullion more appealing, and lower borrowing costs have also increased demand for silver as an industrial input for goods with high electricity conduction needs, as evidenced by the recent rise in solar energy equities. Additionally, supply concerns are supporting silver prices, as COMEX inventories remain under pressure and LBMA stockpiles have declined due to outflows to India.

Our neural network-based forecasting model predicts that silver prices will continue to be close to the $24 per ounce mark this quarter, and we estimate that the price will be around $24.2 in 12 months.

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Silver futures and options contracts are used by mining companies, fabricators of finished products, and users of silver-content industrial materials to manage their price risk. As a precious metal, silver also plays a role in investment portfolios. The largest industrial users of silver are the photographic, jewelry, and electronic industries. The biggest producers of silver are: Mexico, Peru and China followed by Australia, Chile, Bolivia, United States, Poland and Russia.