Silver prices (XAG/USD) have dipped to $30.75 per troy ounce, down 0.65% from the December 3 peak of $31.03. Despite the pullback, the metal continues to consolidate above critical support levels, fueling optimism among analysts about a potential strong upward move in the near term.
At press time, silver has regained momentum, climbing back to $31 per troy ounce. This renewed strength is driven by expectations of potential stimulus measures from China and escalating geopolitical uncertainty, which continue to bolster its safe-haven appeal.
Technical analysis: Bullish patterns in play
Notably, an analysis by Gold Predictors highlights that silver prices have been moving within an upward-sloping price channel, consistently respecting its upper resistance and lower support boundaries. A “Bullish Hammer” candlestick has appeared at the channel’s lower boundary, a classic reversal signal often linked to an impending shift in momentum.
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This pattern suggests that buyers are regaining control after a bout of selling pressure, setting the stage for a potential breakout. Price action within the channel points to a surge toward the $40 to $43 range, aligning with the broader bullish trajectory. For traders and investors, current levels could represent an attractive entry point supported by technical indicators and confirmed reversal patterns.
Ascending broadening wedge and recovery
Further analysis reveals an ascending broadening wedge pattern, which often signals the continuation of an upward trend. Silver recently tested a critical support level near $29.60, forming an inverted head-and-shoulders pattern, a classic indicator of a bullish reversal. Following this test, the price rebounded to $30.69, showing early signs of recovery.
If the bullish momentum persists, projections suggest a potential move toward $37 in the short term, with $40 to $43 remaining the long-term target.
The broadening wedge, combined with strong support levels and reversal signals, sets up a favorable environment for further gains, attracting bullish traders.
Fundamental drivers: Industrial demand and safe-haven appeal
Fundamental factors also strongly support silver’s rally potential. Industrial demand remains a cornerstone of silver’s strength, particularly from the photovoltaic solar panel sector, where demand has doubled over the past three years.
Analysts predict that this robust demand will lead to a supply deficit for the fourth consecutive year in 2025. Additionally, geopolitical uncertainties, such as political unrest in South Korea and France, have bolstered silver’s safe-haven appeal.
Macroeconomic tailwinds
Macroeconomic factors, including Federal Reserve policy, are also critical to silver’s outlook. Markets eagerly await Federal Reserve Chair Jerome Powell’s upcoming speech, where a dovish tone could weaken the U.S. dollar and support silver prices.
Current odds indicate a 74% probability of a 25-basis-point rate cut at the December meeting, according to CME Group’s FedWatch Tool. Powell’s comments, alongside key economic data such as the ADP employment report and Friday’s nonfarm payrolls, could act as catalysts for silver’s next move.
The U.S. dollar index remains strong, which has capped silver’s upside, but any dovish shift in Fed policy could reverse this dynamic.
Despite the recent dip, silver’s performance in 2024 has been impressive, with prices rising 30% year-to-date, poised to end the year at a 12-year high.
That being said, Carsten Fritsch, a precious metals analyst at Commerzbank, highlights that silver is still undervalued relative to gold, as the gold/silver ratio trades around 85 points, unchanged from the year’s start. Fritsch forecasts that silver prices will rise to $32 per troy ounce by mid-2025 highlighting its long-term bullish potential.
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