Silver’s strong performance in 2024 sets the stage
Silver returned 24.65% in 2024 – its best year since 2010. Analysts suggest a repeat performance could occur in 2025, driven by continued central bank buying and continued geopolitical uncertainty. However, the 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 changes could limit Silver’s upside
With Trump set to take office in January, markets are preparing for higher tariffs, deregulation and tax reform. These policies could fuel inflation, reducing the likelihood of continued aggressive rate cuts by the Federal Reserve.
While the Fed cut rates in September, November and December 2024, it has indicated that there will be fewer rate cuts in 2025 due to persistent inflationary pressures. Rising interest rates make non-yielding assets like silver less attractive, potentially limiting further price appreciation.
China’s $411 billion stimulus measures to boost industrial demand
China’s announcement of a $411 billion government bond issuance by 2025 signals a major push to revive its slowing economy. The stimulus measures, focused on infrastructure and advanced manufacturing, are expected to boost demand for industrial metals, including silver. Markets reacted positively, with Chinese shares rising, although bond yields rose in response to concerns about increased debt supply.