Silver has outrun gold for a long time in 2024, but the Trump trade hit XAG/USD harder than XAU/USD, leading to silver’s final defeat. Will anything change next year? Let’s discuss it and make a trading plan.
The article covers the following subjects:
Major Takeaways
- The Trump trade has been more painful for silver than gold.
- Increased capital flows into silver ETFs will reduce aboveground stocks.
- Investors are bullish on XAG/USD.
- A drop in silver to $27.5-$28.5 per ounce will be a reason to buy it.
One-Quarter Fundamental Forecast for Silver
Silver is sometimes called “gold on steroids” because XAG/USD typically rises and falls faster than XAU/USD. In 2024, the less expensive metal remained in the shadow of its more valuable counterpart, responding sensitively to dedollarization, central bank activity in the gold market, monetary policies, and the Trump trade. The latter triggered sharp silver sell-offs at the end of the year, leaving the white metal trailing behind the sector leader. However, in 2025, the situation might turn completely around.
A strong investment demand and active industrial usage give XAG/USD an advantage over XAU/USD. According to TD Securities, the acceleration of the U.S. and Chinese economies in the second half of 2025 is expected to create a favorable environment for silver. Currently, its aboveground reserves are significant, preventing market deficits from driving prices higher. However, if capital flows into ETFs begin to grow actively, the situation could change dramatically.
Aboveground Silver Stocks and ETF Holdings
Source: Kitco.
TD Securities relies on the fact that specialized fund holdings tend to grow during the Fed’s policy easing cycles. Everything will depend on how quickly they proceed. Combined with the growth potential of Chinese speculators’ positioning in silver, this adds optimism for XAGUSD bulls.
ETF Reserves and Speculative Positions in Silver
Source: Kitco.
According to Saxo Bank, silver is expected to outperform gold in 2025, with its price rising to $32 by mid-year and reaching $33 per ounce by year-end. Meanwhile, XAU/USD quotes are projected to remain unchanged, fluctuating around 2,650. This forecast can confidently be described as conservative.
According to Kitco’s survey, 48% of 176 retail investors believe silver will trade above $40 per ounce in 2025, while 20% predict a $35–$40 range. Only 23% anticipate prices falling to $22–$30 per ounce.
If silver does rise, it will likely happen in the second half of next year. During the first quarter, the precious metals sector will likely come under pressure due to Donald Trump’s readiness to fulfill his campaign promises. The acceleration of the U.S. economy, driven by fiscal stimulus, is expected to push the yield on 10-year Treasuries above 5%, while trade tariffs will allow the USD index to continue its rally.
Trading Plan for Silver for One Quarter
Concerningly, both gold and silver will face severe headwinds, sending their prices down in the first quarter of 2025. Hold silver shorts opened at $31.5-$32.5 and build them up on retracements. A fall to $27.5-$28.5 per ounce, the lower boundary of the $27.5-$32.5 medium-term consolidation range, should be used to lock in profits and reverse positions.
Price chart of XAGUSD in real time mode
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteFinance. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.
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