Silver Price Forecast: $33 Breakout—From Graveyard to Launchpad for Bulls?

Silver breaks above $33 to close at YTD highs
Price and momentum signals point to a potential retest of October highs
Escalating trade tensions could fuel silver’s supply concerns
Bulls need to hold above $33 to maintain the bullish bias

Summary

Silver looks perky heading into the weekend, surging above $33 per ounce on Wednesday to the highest close since late October. With the metal showing little relationship with traditional drivers such as the U.S. dollar and Treasury yields, its recent outperformance may reflect tailwinds from escalating trade tensions, given a large proportion of global production comes from just two countries: Mexico and China. Given the threat of supply disruptions for the key precious metal, which is also an important input in the industrial sector, the increasingly positive technical picture may see silver aim for a retest of the October 2024 highs.

Old Relationships Break Down

Source: TradingView

Silver is moving to its own beat in early 2025, maintaining only a relatively modest relationship with other metals like copper (red), gold (green), aluminum (yellow), and tin (black) over the past month. Its inverse relationship with the U.S. dollar index (blue) has not been particularly strong over the same period, with the correlation with real, inflation-adjusted 10-year U.S. Treasury yields (aqua) also insignificant. It’s not shown on the graph, but nor has it seen any meaningful relationship with speculative assets given it’s often favoured by retail traders. Silver is doing its own thing, perhaps driven by supply chain risks.

Trade War Beneficiary?

Based on the latest data from the United States Geological Survey (USGS), Mexico led global silver production with approximately 6,400 metric tons in 2023, accounting for 24.8% of the world's total. China produced around 3,400 metric tons, or 13.2%, narrowly edging out Peru, which contributed about 3,100 metric tons, or 12%. Collectively, these three nations were responsible for over half of the global silver production.

This highlights the significant roles that Mexico, China, and Peru play in the global silver mining industry, collectively contributing a substantial portion of the world's silver supply. Given Mexico and China were among the countries hardest hit in the early forays of Donald Trump’s trade war, any further escalation in protectionism could easily impact silver supply.

Silver Enters Graveyard

Source: TradingView

Silver looks great on the charts, closing above $33 for the first time since late October. Previously, this was like a graveyard for bullish raids, putting increased emphasis on the price action over the next few days.

Whether you’re talking price or momentum signals, they suggest this break may stick where others failed, putting a potential retest of the October 2024 swing high of $34.87 into play. We saw a key bullish reversal candle on Tuesday, followed up by further buying on Wednesday, contributing to the bullish break. That’s not surprising given price signals have often proved accurate in silver recently. RSI (14) is trending higher, with MACD confirming the bullish momentum signal. The ducks are lining up. If silver can’t capitalise in this environment, it will be a telling sign as to where medium-term directional risks may lie.

Those considering bullish setups could buy above $33 with a stop beneath the level for protection. Some resistance may be encountered around $34 and $34.50, with a break above the latter putting $34.87 on the table. $35.36 and $37.46 are long-standing levels located just above. If silver were to reverse and close through $33, the near-term bullish bias would be invalidated.

-- Written by David Scutt

Follow David on Twitter @scutty

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