Silver (XAG) Forecast: Traders Bracing for Volatility as Fed, Trump, and China Drive Outlook

Silver Holds Steady as Traders Look to 2025 Fed Policy

Silver prices remained stable in light holiday trading on Tuesday, with investor attention shifting to the Federal Reserve’s 2025 interest rate outlook and potential policy changes under President-elect Donald Trump. A low liquidity environment continues to shape the current sideways movement.

At 16:49 GMT, XAG/USD is trading $29.67, up $0.01 or +0.04%.

Silver’s Strong 2024 Performance Sets the Stage

Silver notched a 24.65% gain in 2024—its best year since 2010. Analysts suggest a repeat performance could materialize in 2025, driven by sustained central bank purchases and ongoing geopolitical uncertainty. However, bullish momentum began to wane in November as the dollar strengthened, fueled by optimism surrounding Trump’s return to the White House.

Trump’s Policy Shifts Could Cap Silver’s Upside

With Trump set to assume office in January, markets are bracing for increased tariffs, deregulation, and tax reforms. These policies could stoke inflation, reducing the likelihood of continued aggressive rate cuts from the Federal Reserve.

While the Fed lowered rates in September, November, and December of 2024, it has indicated fewer cuts in 2025 due to persistent inflation pressures. Rising rates make non-yielding assets like silver less attractive, potentially limiting further price appreciation.

China’s $411 Billion Stimulus to Drive Industrial Demand

China’s announcement of a $411 billion treasury bond issuance for 2025 signals a major push to revitalize its slowing economy. The stimulus, aimed at infrastructure and advanced manufacturing, is expected to boost demand for industrial metals, including silver. Markets responded positively, with Chinese equities rising, though bond yields climbed in response to concerns over increased debt supply.

Market Forecast

Silver’s performance in early 2025 will largely depend on the interplay between Fed policy and China’s economic expansion. Escalating tariffs could drive investors toward silver as a safe-haven asset. However, rising yields and a firm dollar may counterbalance this demand.

Industrial consumption fueled by China’s stimulus provides a bullish undertone, suggesting silver may trade between $26 and $34 unless unexpected geopolitical events alter the outlook. Traders should stay alert to tariff developments and Fed announcements, which could shape price action.

More Information in our Economic Calendar.