Silver futures (XAG/USD) maintained their upward trajectory Monday, trading at $34.13 per ounce during Asian hours, as a combination of technical strength and macroeconomic tailwinds continued to underpin the precious metal. While gains have moderated slightly from recent peaks, market analysts remain optimistic about silver’s ability to extend its rally.
Technical Indicators Signal Further Upside
From a technical perspective, silver has established a robust foundation above the critical $34.00 level, forming a symmetrical triangle pattern on the daily chart. The Relative Strength Index (RSI) at 62 suggests the metal remains in overbought territory, yet momentum oscillators like the Moving Average Convergence Divergence (MACD) indicate sustained buying pressure. A decisive break above the $34.60 resistance—last tested in December 2024—could trigger a move toward the all-time high of $34.85 set in October 2024.
Dual Drivers: Safe-Haven Demand and Industrial Growth
The rally stems from two primary sources: global geopolitical tensions and expanding industrial consumption. Escalating U.S.-China trade tensions have boosted silver’s appeal as a hedge asset, while the metal’s industrial applications—particularly in solar panel production and semiconductor manufacturing—are fueling physical demand. Data released Friday showed global silver inventories dropped by 4.2% in Q1 2025, pushing the annual supply deficit to an estimated 8,500 metric tons.
Currency Dynamics and ETF Flows Add Support
A weaker U.S. dollar, driven by dovish Federal Reserve signals, has also bolstered silver’s performance. The dollar index (DXY) fell 0.3% overnight, making commodities denominated in greenbacks more attractive to international buyers. Meanwhile, speculative positioning in COMEX silver futures has reached a net-long of 125,000 contracts—the highest since January 2024—reflecting growing institutional confidence.
Caution Amid Volatility Risks
Despite bullish sentiment, traders are advised to monitor potential headwinds. A reversal in Fed policy or de-escalation in trade disputes could prompt profit-taking, with immediate support at $33.50 and $33.00. Additionally, silver’s historically high volatility—exemplified by its 60-day average true range of 2.8%—poses risks for leveraged investors.
Outlook: Cautious Optimism Prevails
“Silver’s dual role as both an industrial metal and safe haven positions it well for continued gains,” stated a senior analyst at Goldman Sachs. “However, near-term gains may hinge on the Fed’s May policy announcement.” Most forecasts project silver to test $36.00 by Q3 2025 if global economic uncertainty persists, though a dovish Fed pivot could accelerate this timeline.
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