The nearest support is a low of $28.75. If this continues, prices could bounce back to the pivot at $30.44. If this level is overcome, momentum will shift upwards, creating the possibility of a near-term rise towards a resistance cluster formed by a new pivot at $32.26 and the minor top at $32.33.
Taking out $28.75 with conviction opens the door to a possible steep breakout with initial targets of $26.47 to $26.02.
Supply shortages and industrial demand support the long-term outlook
The imbalance between silver supply and demand remains a long-term supportive factor. In 2024, production rose just 2% to 1.03 billion ounces, while demand rose 7% to 1.21 billion ounces, leaving the market with a deficit of 182 million ounces. This is the fourth consecutive year of undersupply, largely caused by industrial applications related to green technologies. Demand from solar panel and electric vehicle production continues to outpace supply, reinforcing the positive case for silver over the long term.
China’s $411 billion infrastructure stimulus for 2025 is expected to further boost silver consumption, in line with the country’s renewable energy initiatives. Industrial demand associated with these projects could significantly strengthen silver supply and demand dynamics in the future.
Fed policy and Treasury yields weigh on near-term performance
The Federal Reserve’s measured approach to rate cuts remains a major obstacle for silver. After three cuts in late 2024, the Fed announced plans for an easing of just 50 basis points in 2025. This cautious stance supports the US dollar and keeps Treasury yields high, reducing the appeal of non-yielding assets like silver. Ten-year Treasury yields currently stand at 4.631%, which further increases the opportunity cost of silver.
Geopolitical uncertainty provides modest support for safe havens
Geopolitical risks still provide limited support for silver. Although gold remains the main safe haven in times of uncertainty, silver benefits indirectly. Ongoing conflicts in Ukraine and the Middle East, in addition to gold purchases by central banks, have helped stabilize precious metals markets, preventing a deeper decline in silver prices.