Silver (XAG) Forecast: Will Safe-Haven Demand Drive Prices Beyond $30.71?

Silver Rises on Strong Technical Support and Safe-Haven Demand

Silver extended its rally on Thursday, driven by a decisive move above the 200-day moving average at $29.92. This level now serves as critical support, bolstering the metal’s bullish momentum. Traders are eyeing short-term targets at $30.54 and the 50-day moving average at $30.71, the latter of which could act as initial resistance. A break above $30.71 could pave the way for an acceleration toward the December peak at $32.33.

Safe-Haven Demand Counters Dollar and Yield Pressures

Silver continues to hold near a three-week high, supported by robust safe-haven demand amid global uncertainties. Investors remain cautious over geopolitical tensions and economic risks, particularly concerns surrounding President-elect Donald Trump’s proposed tariffs, which could drive inflation and enhance silver’s appeal as an inflation hedge.

However, headwinds from a stronger U.S. dollar and rising Treasury yields present challenges. The dollar index hovers near a one-week high, diminishing silver’s attractiveness for non-dollar investors. Meanwhile, the 10-year Treasury yield surged to 4.73%, its highest since April, potentially capping silver’s upside.

Fed Policy and Nonfarm Payrolls in Focus

Minutes from the Federal Reserve’s December meeting revealed heightened concerns over persistent inflation, clouding the outlook for rate cuts in 2025. Market participants currently expect only two quarter-point rate cuts this year, though ongoing quantitative tightening and trade uncertainties may complicate the Fed’s strategy.

Attention is now turning to Friday’s U.S. nonfarm payrolls report, with forecasts calling for a 160,000-job gain in December. A weaker-than-expected report could ease fears of further rate hikes, offering additional support to silver prices.

Short-Term Outlook: Bullish but Cautious

Silver’s technical momentum and safe-haven demand underpin a near-term bullish outlook. A sustained move above $30.54 and the 50-day moving average at $30.71 could trigger a rally toward $32.33. However, a stronger dollar and elevated Treasury yields may limit gains. Traders should closely monitor Friday’s jobs data and evolving inflationary risks for further cues.

More Information in our Economic Calendar.