- Silver begins 2025 at a key technical juncture after a strong 2024 performance.
- Key levels and economic trends could shape silver’s path to $35 and beyond.
- Bullish momentum hinges on overcoming near-term resistance at $30.
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Silver was trading higher to start the first full week of trading of the year, while gold was a touch lower on the session. Though the grey metal gave back a big chunk of its gains in the latter parts of 2024, it still managed to climb 21% on the year, ending a 3-year consolidative period and finally catching up with gold.
Yet, unlike gold, it failed to hit any new record highs, largely due to concerns over China’s economy. Will 2025 prove to be another bullish year for silver? While there may be some short-term obstacles, I think silver looks set to climb to $35 this year, and possibly a lot higher over time.
Fundamental factors to watch in 2025
One factor that has been holding silver back in recent months is the slowdown in China’s economy—the world’s largest gold consumer and second-largest silver consumer nation behind the US. It is important to watch Chinese data closely. If a trend of stronger-than-expected data emerges, then this would suggest that monetary support in China is finally starting to work its way through the economy, potentially resulting in higher demand for all sorts of industrial and precious metals.
In the US, monetary policy is expected to stay tight in early 2025 as the Fed assesses the impact of Trump’s policies. This is likely to keep bond yields elevated and the US dollar strong, both of which are potentially significant obstacles for gold and silver. Elevated bond yields increase the opportunity cost of holding gold and silver, non-yielding asset, while a strong dollar makes silver and gold more expensive for international buyers.
Still, with the green energy drive in full motion, demand for silver is set to grow significantly in the long term. Additionally, silver’s role as a store of value remains compelling in the face of inflationary concerns and geopolitical tensions, while haven demand for both gold and silver could offset some of the short-term weakness in key markets like China.
Silver technical analysis
Since peaking at $34.87, silver has made a couple of lower highs and lower lows. It has broken some key support levels in the process and moved below a few moving averages. The bullish momentum from much of 2024 has been lost in the process. But the long-term trend remains bullish, and I am now on the lookout for a fresh bull signal to emerge as prices have dipped to some technically important areas.
Price action since October is reminiscent of that of May – August 2024, when the metal went on a multi-month consolidation phase after surging to a new multi-year high. The consolidation ended around mid-August, leading to a fresh rally to new multi-year highs, before peaking in October. This time, it is not yet clear whether we have reached the end of the corrective phase, but if and when we do, I would expect a similar sharp rally to ensue, potentially targeting the $35 level.
Silver trade ideas
For me, the area around $28.80 to $29.00 marks a key support zone. This is where Silver last staged a breakout from in early September and has now tested this zone on a couple of occasions in what has admittedly been holiday-thinned trading. While silver may have formed a double bottom here already, I will still be looking out for further bullish confirmation before committing on the long side again.
Perhaps a decisive close back above the broken trend line that had been in place since early 2024 would be the signal I am looking for. If this were to happen, silver would also climb back above the pivotal level of $30.
Alternatively, if silver continues to dip lower without providing the above bullish scenario, then the next big technical area to watch for a possible reversal would be around $26.00 to 26.50, where the long-term trend line comes into focus. But ideally, I wouldn’t like silver to dip this deep, for that will erode the bullish momentum further and give further confidence to the bears.
In short
So, silver is at a crossroads here and while the long-term trend is still arguably bullish, it would be an ideal scenario for the bulls if we were to see a decisive move back above the $30.00 hurdle in the next few days.
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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, counsel or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple perspectives and is highly risky and therefore, any investment decision and the associated risk remains with the investor.