Silver (XAG) Forecast: Bearish Momentum Targets $28.74 – $28.40 as Treasury Yields Surge

Key Points:

• Silver rejected at $29.73, the 200-day moving average, signaling a potential drop to support near $28.74-$28.40.

• Rising Treasury yields and dollar strength weigh on silver, but supply deficits and industrial demand support long-term gains.

• Silver’s 2024 production rose 2%, but demand jumped 7%, driving a 182-million-ounce supply deficit, the fourth consecutive shortfall.

• Industrial demand, driven by solar panels and EVs, reinforces silver’s bullish outlook despite near-term technical weakness.

• Traders await value buying near $28.40 as silver’s long-term fundamentals remain intact despite short-term bearish signals. ### In this article:

• Silver

-1.41%

Silver Prices Drop After Rejection at Key Technical Level

Silver (XAG/USD) ended Friday’s session significantly lower, falling to $29.38 after traders failed to push prices above the 200-day moving average at $29.73. This level remains a key technical barrier, with potential for a breakout if silver can regain upward momentum. However, the rejection has shifted focus to the downside, with a support zone forming between $28.74 and $28.40, signaling the possibility of further declines before new buyers step in​.

Technical Outlook and Market Positioning

Daily Silver (XAG/USD) Silver’s inability to sustain gains above the 200-day moving average suggests the market is struggling for momentum. Traders seem hesitant to chase higher prices, opting instead to wait for deeper value. This cautious sentiment contrasts with previous weeks when silver tested resistance near $29.73, a critical pivot point that could unlock higher targets at $30.53 and beyond​.

Silver’s price action mirrors movements in gold, which also experienced downward pressure due to rising U.S. Treasury yields and dollar strength. The 10-year yield climbed to 4.641%, reinforcing a firm dollar and weighing on non-yielding assets like silver and gold​.

Fundamental Drivers: Supply Deficit and Industrial Demand

Despite short-term weakness, silver’s longer-term fundamentals remain robust. Industrial demand continues to grow, particularly from the solar energy and electric vehicle sectors. At the same time, supply constraints persist, with 2024 production rising just 2% against a projected demand increase of 7%, resulting in a 182-million-ounce deficit. This marks the fourth consecutive year of undersupply​.

The supply-demand imbalance supports silver’s bullish outlook, even as the Federal Reserve signals limited rate cuts in 2025, potentially capping near-term gains. Silver’s correlation with gold remains a driving force, with geopolitical risks and strong central bank buying keeping both metals in focus for investors seeking safe-haven assets​.

Short-Term Forecast

In the short term, silver may retest the $28.74 to $28.40 support zone as the market searches for buying interest. A decisive break below this area could expose deeper support near $26.87. On the upside, a sustained move above $29.73 would shift momentum back toward bullish targets at $30.53 and potentially higher​.

Traders should closely monitor Treasury yields and Federal Reserve updates for signals that could influence dollar strength and, by extension, silver’s performance.

More Information in our Economic Calendar.