Silver prices rose by about 4% this week, currently trading near the $52 level. The main driver behind this rebound in the white metal is the sharp increase in market expectations for a 25-basis-point rate cut at the Federal Reserve’s December 10 meeting, with the probability jumping to 80% after being below 30% last week. This shift has provided strong positive momentum for silver.
However, uncertainty surrounding the future path of U.S. interest rates remains the biggest risk for silver, especially ahead of the upcoming FOMC meeting on December 10, amid clear divisions among Fed members and significant volatility in market expectations. Silver has also gained nearly 80% year-to-date.
Despite the current fluctuations, medium- and long-term expectations still point toward a continued upward trend for several reasons:
- A strong positive correlation between gold and silver: when gold rises, silver typically moves higher at an even faster pace, and the same applies during downward movements.
- Robust industrial demand for silver, given its use across multiple sectors including medical equipment, electronics, and electric vehicles. The age of artificial intelligence further boosts demand through the heavy reliance of its infrastructure on electronic components that contain silver.
- A persistent supply deficit, as annual demand continues to exceed supply, meaning available quantities fall short of market needs—putting upward pressure on prices.
- An accommodative monetary policy outlook, with growing expectations of Fed rate cuts.
From a technical perspective, the 20-, 50-, and 200-day moving averages remain well-aligned in a clear upward trend. The next key challenge is reaching the major resistance level at $54.40, which prices tested twice this year—in October and November—without a successful breakout. A clear move above this level would open the door to new record highs. Meanwhile, the Relative Strength Index (RSI) currently stands at 59, reflecting sustained positive momentum in silver.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
