Silver (XAG) Forecast: $29.73 Standoff – Is Silver Ready to Rally or Roll Over

Silver Prices Test Resistance as Supply Shortages and Fed Policy Shape Market

Silver prices are pressing against the 200-day moving average at $29.73, a critical technical level that could dictate near-term price direction. Traders are closely monitoring whether silver can push higher or if selling pressure will force a retreat. A decisive move at this juncture could determine silver’s trend heading into early 2025.

At 12:38 GMT, XAG/USD is trading $29.64, down $0.18 or -0.61%.

Supply Deficit and Industrial Demand Continue to Drive Prices

Silver’s market fundamentals reflect a tightening supply. Production in 2024 rose just 2% to 1.03 billion ounces, while demand is projected to hit 1.21 billion ounces, resulting in a 182-million-ounce deficit. This marks the fourth consecutive year of undersupply, with no new major mining projects expected to ease the shortage.

Industrial demand remains robust, rising 7% this year, driven by silver’s essential role in green energy technologies. Solar panel production and electric vehicle components are key drivers, with forecasts suggesting solar demand alone could absorb much of the annual supply by 2050. This sustained industrial appetite continues to underpin silver’s longer-term bullish narrative.

Silver Mirrors Gold as Fed Policy and Dollar Strength Weigh on Outlook

Silver’s performance is closely correlated with gold, which faces resistance near $2629.13. Gold’s pullback reflects a stronger dollar and rising U.S. Treasury yields, which are capping gains for both metals. The Federal Reserve’s recent comments suggest limited rate cuts in 2025, with just 50 basis points of easing anticipated, keeping the dollar firm.

Gold’s resilience—up 27% this year—highlights strong safe-haven demand, amplified by geopolitical risks. Israeli airstrikes and ongoing conflict in Ukraine continue to drive gold buying, indirectly supporting silver. However, the stronger dollar and elevated Treasury yields, with the 10-year yield at 4.607%, present headwinds that could limit silver’s upside.

Key Technical Levels to Watch

Silver’s 200-day moving average at $29.73 remains pivotal. A sustained break above this level could trigger a rally towards $30.53, with higher targets at $31.47. Conversely, failure to hold this level may push prices lower, with support near $28.74 and further downside potential at $28.40 to $26.87.

Market Forecast

Silver’s near-term outlook is cautiously bullish, supported by persistent supply deficits and growing industrial demand. The $29.73 level will dictate market momentum. A break higher opens the door for further gains, while failure to hold may see silver consolidate near $28.40. Traders should monitor Fed signals and gold price movements, as both remain influential drivers of silver’s path.

More Information in our Economic Calendar.