Silver (XAG) Forecast: 200-Day Average at $29.71 Holds Key to Silver’s Next Move

Prices Edge Higher, Testing Key Resistance at 200-Day Moving Average

Silver prices are trending higher, with the market currently testing the 200-day moving average at $29.71. This level is proving to be a pivotal point for near-term direction, as traders assess whether silver can maintain upward momentum or face renewed selling pressure. A decisive move in either direction could shape price action heading into early 2025.

At 13:01 GMT, XAG/USD is trading $29.78, up $0.15 or +0.52%.

Supply Shortages and Industrial Demand Support Market

Silver’s market fundamentals continue to reflect tightening conditions. In 2024, production increased by just 2% to 1.03 billion ounces, while demand is projected to reach 1.21 billion ounces – resulting in a 182-million-ounce deficit. This marks the fourth straight year of undersupply, with no significant mining projects on the horizon to alleviate shortages.

Industrial consumption remains the primary driver, climbing 7% in 2024. Silver’s expanding role in green technologies, particularly solar panels and electric vehicles, highlights the potential for prolonged demand growth. Projections indicate solar panel manufacturing alone could absorb most of the annual output by 2050, keeping supply under pressure.

Fed Policy and Gold Correlation Influence Silver’s Path

Silver’s price movements are closely aligned with gold, which is also testing key technical zones amid a hawkish Federal Reserve stance. The Fed’s plan for modest easing in 2025, with just 50bps of cuts anticipated, suggests limited downside for the dollar – a potential headwind for silver. However, any weakening in U.S. economic data or dovish signals from the Fed could boost both metals.

Gold’s 27% rise this year underscores strong safe-haven demand, and if inflation or geopolitical risks drive further gold buying, silver is likely to follow with amplified volatility.

Technical Levels to Watch

Silver’s 200-day moving average at $29.71 serves as the current battleground. A sustained move below this level would signal the presence of sellers, with downside targets at $28.74 and the key value zone between $28.40 and $26.87. On the upside, a momentum-driven rally could lead to a retest of $30.53, with further gains eyeing $31.47.

Market Forecast: Cautiously Bullish with Technical Resistance

Silver’s outlook remains cautiously bullish, supported by structural supply deficits and growing industrial demand. The 200-day moving average at $29.71 will be critical in determining near-term momentum. A break above this level could pave the way for silver to retest higher resistance zones, while failure to hold may lead to price consolidation near $28.40. Traders should monitor technical levels closely as silver’s next move hinges on broader market cues and Fed policy shifts.

More Information in our Economic Calendar.