Silver Forecast: Can XAG/USD Surpass $35 in 2025?

Silver has kicked off 2025 on a strong note, following its 21% gain last year. At the time of writing, it was up 1.6% on the session and 4.1% year-to-date. While last year it lagged gold in reaching new record highs due to economic concerns in China, silver’s long-term prospects appear promising. The question remains: can silver climb to $35 or higher this year? Here’s an in-depth look at the factors shaping the silver forecast.

Key Fundamental Drivers for silver forecast in 2025

1. China’s Economic Recovery

    

   One of the major headwinds for silver has been the slowdown in China’s economy. As the world’s second-largest consumer of silver, any uptick in Chinese economic activity could provide significant support for the metal. Improved economic data from China could indicate that the country’s monetary stimulus is starting to bear fruit, boosting industrial and precious metals demand alike.

    

2. US Monetary Policy

    

   In the United States, tight monetary policy is expected to persist into early 2025. Elevated bond yields and a strong US dollar could pose short-term challenges for silver. Higher yields increase the opportunity cost of holding non-yielding assets like silver, while a strong dollar makes it pricier for international buyers. However, the dollar index appears to be facing resistance in the 109.00 to 109.50 range, suggesting there is a chance we could see some weakness creep into the US dollar, which could ease pressure on silver prices.

    

3. Green Energy and Geopolitical Tensions

Silver’s role in renewable energy applications ensures robust demand over the long term. Additionally, its status as a haven asset makes it attractive amid inflationary pressures and ongoing geopolitical tensions. These factors could offset some of the headwinds, keeping silver’s long-term bullish narrative intact.

Silver technical analysis

Since peaking at $34.87 in October, silver’s price action has shown some lower highs and lows. Key support levels have been tested, and prices are trading below several moving averages, signalling a loss of bullish momentum.

However, the long-term uptrend remains intact. In fact, the current price action resembles the May-August 2024 consolidation phase, which eventually led to a sharp rally. A decisive end to the current corrective phase could trigger a similar surge, potentially targeting the $35 level.

Source: TradingView.com

Key areas to watch include the $30 zone, where silver was trading at the time of writing. Here, it was testing the backside of the broken trend line that had been in place for much of 2024. A potential break back above this trend line would be deemed a bullish technical breakthrough.

However, if silver goes back below the $30.00 level, then the next key area to watch is between $28.80-$29.00 zone, where silver had staged a breakout last September. A strong rebound from this level, coupled with a close above the pivotal $30 mark, could confirm a fresh bullish trend. So far today, it looks that way, but the day is still young. Conversely, a dip below $28.80 could shift focus to the $26.00-$26.50 zone, although such a decline might weaken the bullish case.

Trade Ideas for Silver

Bullish Scenario: Look for a decisive close above $30.00, which would signal renewed momentum toward the $35 target, with the December high at 32.34 being the initially upside objective.

Bearish Scenario: Monitor the $28.80-$29.00 support zone closely. A break below this level could open the door for further declines, possibly towards the next support zone around $26.00-$26.50.

In Conclusion

Silver’s 2025 outlook remains cautiously optimistic. While short-term challenges exist, the metal’s role in green energy, combined with its haven appeal, underpins its long-term bullish prospects. A decisive move back above $30 could pave the way for silver to test $35 and beyond.

-- Written by Fawad Razaqzada, Market Analyst

Follow Fawad on Twitter @Trader_F_R