Silver’s price action mirrors the movement of gold, which also experienced downward pressure due to rising US Treasury yields and dollar strength. The 10-year yield rose to 4.641%, strengthening a strong dollar and putting pressure on non-yielding assets such as silver and gold.
Fundamental factors: supply shortage and industrial demand
Despite the short-term weakness, silver’s longer-term fundamentals remain robust. Industrial demand continues to grow, especially from the solar energy and electric vehicle sectors. At the same time, supply constraints remain: in 2024, production will increase by only 2%, while the expected increase in demand will increase by 7%, resulting in a shortage of 182 million ounces. This is the fourth year in a row that there has been undersupply.
The supply-demand imbalance supports the bullish outlook for silver, even as the Federal Reserve signals limited rate cuts through 2025, potentially limiting near-term gains. Silver’s correlation with gold remains a driving force, with geopolitical risks and strong central bank buying keeping both metals in focus for investors looking for safe-haven assets.
Short-term forecasting
In the near term, silver could retest the $28.74 to $28.40 support zone as the market looks for buying interest. A decisive break below this area could reveal deeper support around $26.87. On the upside, a sustained move above $29.73 would return momentum to bullish targets at $30.53 and potentially higher.
Traders should keep a close eye on Treasury yields and updates from the Federal Reserve for signals that could impact the strength of the dollar and, by extension, the performance of silver.
More information in our Economic Calendar.