Silver Price Forecast: XAGUSD Eyes $70 on US Critical Mineral Inclusion, Industrial Demand and a Dovish FED
Silver continues to be the best-performing metal due to its restricted supply, robust industrial demand, and good macroeconomic conditions.
Quick overview
- Silver is currently the top-performing metal, driven by supply constraints and strong industrial demand.
- The recent rally was fueled by breaking through a significant price ceiling and supportive macroeconomic conditions.
- Silver's designation as a 'critical mineral' by the US government is expected to enhance long-term demand and influence tariff policies.
- With tightening supply and increasing investor interest, silver's bullish trend shows little sign of slowing down.
Live SILVER Chart
Silver continues to be the best-performing metal due to its restricted supply, robust industrial demand, and good macroeconomic conditions.
Silver Pushes Ahead as the Market’s Top Performer
Silver has extended its dominance across global metals, entering a new week of gains after surging into record territory. The metal’s advance is fueled by a combination of tightening physical fundamentals, renewed investor interest, and a macroeconomic backdrop increasingly favorable to precious metals. With technical momentum firmly intact and bullish sentiment building, silver is emerging as the standout story in commodities markets, as traders monitor potential moves toward the next milestone.
Last week, silver benefited from rising industrial demand, a weaker US Dollar (USD), and its addition to the US critical minerals list, all factors combining to reinforce the rally.
A Breakout That Redefined the Trend
The rally gained momentum after silver finally broke through a price ceiling that had constrained its advance for nearly two months. The $54.40–$54.50 zone acted as a stubborn resistance through October and November. Once that barrier was overcome, buyers surged in with conviction, driving silver to $59.42 early last week.
The advance continued, with XAG/USD briefly breaching the psychologically significant $60 mark on Tuesday, reaching $64.64 following a Federal Reserve rate cut in December. Chair Jerome Powell explicitly ruled out further rate hikes, a move interpreted as supportive for non-yielding assets such as precious metals.
Silver Chart Daily – The 50 SMA Acting As Support
Simultaneously, the Fed announced $40 billion in Reserve Management Purchases of Treasury bills starting December 12. Although labeled as a technical liquidity operation, markets viewed it as an expansionary signal. Lower interest rates combined with increased liquidity have bolstered demand for precious metals as a hedge against currency risk.
Silver As A Critical Mineral to the US
Adding to the bullish backdrop, the US Department of the Interior designated silver as a “critical mineral,” raising the likelihood of its inclusion in future tariff policies. Significant volumes were delivered to US warehouses in anticipation of potential tariffs, tightening supply in global markets and lifting long-term demand expectations.
Trend Structure Strengthens as Bulls Remain in Control
Technically, silver’s trend remains firmly bullish. On daily charts, the metal has respected a rising structure since late October, with each dip met by strong buying. The 50-day Simple Moving Average (SMA) has repeatedly acted as a springboard, providing traders with a reliable reference for trend health.
Former resistance levels at $54.50 and $60 now serve as support zones, reinforcing the upside case. Price action shows little sign of exhaustion, as intraday dips continue to attract renewed buying interest.
Industrial demand also supports the rally. Analysts at Saxo Bank highlighted sectors such as solar energy (PV), electric vehicles (EVs) and their charging infrastructure, and AI data centers as key drivers of silver consumption through 2030.
Shrinking Inventories Tighten the Supply Picture
Supply dynamics are increasingly underpinning silver’s rally. Spot XAG/USD trades near $58.40, more than 12% higher on the week, and the metal is set to record its eighth consecutive monthly gain. Inventories on the Shanghai Futures Exchange have dropped to their lowest level since 2015, while transaction volumes on the Shanghai Gold Exchange are at a nine-year low, signaling constrained availability.
Institutional appetite is surging as well. Silver ETFs recorded a 200-ton inflow on December 3, one of the largest single-day allocations in years. This trend reflects long-term positioning rather than short-term speculation, suggesting a deepening conviction in silver’s structural outlook.
Signs of supply strain are apparent globally, with increased physical shipments through London indicating an emerging imbalance. Market participants are increasingly pricing these dynamics into forward expectations, strengthening silver’s bullish narrative.
Macro Tailwinds Boost Precious Metals Appeal
Central bank policies continue to favor precious metals. A dovish Federal Reserve stance, combined with ongoing liquidity injections, has created a supportive macro backdrop for silver. Supply constraints, rising investor flows, and growing industrial demand reinforce the bullish technical picture.
A Metal With Clear Momentum and Few Immediate Obstacles
Silver enters the week with substantial tailwinds, supported by both technical momentum and fundamental drivers. With supply tightening, investor demand accelerating, and macro conditions favorable, the path toward higher levels remains open. Traders now watch closely to see whether silver can maintain its gains above $60 and mount a challenge toward $65, potentially defining the next pivotal moment in the market.
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