Last year was a bright time for silver, with its price surging over 15 per cent. During 2019, the metal’s value reached highs of $19.50 an ounce and settled at around $18 an ounce in the final trading days of the year. In 2020, however, the global markets are predicted to be bombarded with significant uncertainty and turmoil.
Today, investors and traders need to take quick, but thoughtful decisions to stay afloat during these times of economic and political turbulence. As tradition has it, many may choose to look to the precious metals market – silver, in particular. It carries a high intrinsic value and may bring added diversity to a portfolio and has become one of the main points of interest during this month.
With physical demand estimated at $15.2bn per year, the silver market is small in comparison to its sister metal, gold, and tends to be rather volatile. However, its lower price makes silver a more affordable option for traders while still offering an attractive investment prospect.
Silver price analysis: why did the metal soar in the first days of January?
On January 3, a US airstrike killed a top Iranian general, sending shock waves through the Middle East. With tensions already high, the event has raised fears of all-out war in the region after Iran vowed revenge on America for the assassination.
The markets reacted on Monday, causing safe-haven assets, such as silver and gold, to make substantial gains. Silver price news suggests that while investors were clearly shaken, the metal continued to rise in value for a few days as geopolitical tensions remained high.
On Wednesday, following reports of Iranian missile attacks on US military bases in Iraq, silver surged past the $18.83 level for the first time in almost four months.
The same day, Donald Trump stated that the Iranian attack had caused “only minimal damage” adding that the US is “ready to embrace peace with all who seek it”. With Trump appearing to stand down, relieved investors boosted the equities market higher. After this silver saw some sharp losses, retreating down to $18.
Even though the metal initially tried to rally during Thursday’s trading session, it gave back the gains and fell to recent lows at $17.81. Prices were down as risk appetite returned to the global marketplace on the assumption that the US and Iran have stepped back from escalating the military conflict.
Where is the silver price heading next? Watch David Jones, chief market strategist at Capital.com, review the metal’s latest performance and make his own silver price analysis:
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So, what comes next?
Our silver price analysis for January focuses on larger trends that have seen the metal’s value grow slowly but steadily over the past several months. This remains the same, with recent events helping the metal reach some resistance levels earlier in the year than expected.
However, looking at today’s wobbling silver prices, the market’s rush into safety may have been a bit too quick, and we are likely to see a pullback, resulting in prices below current levels.
The rapid de-escalation of tensions between the US and Iran combined with the strength of the $19 resistance area are now silver’s main driving forces. If there are no further acts of aggression from either side, silver could fall down to some of the support levels mentioned in the video.
Nonetheless, support levels do look quite strong and once reached, silver volume is likely to increase and continue the longer bullish trend of 2020.
Will tensions in the Middle East continue fuelling silver’s rise or will sellers regain control of the metal’s price in the coming weeks? Follow Capital.com to know what’s happening to silver prices and spot the best trading opportunities.
Do you have a forecast of your own? Will silver prices go up to hit new record highs? Check our live silver chart and make your own bets!
