Silver (XAG) Forecast: Bullish Price Prediction as Physical Squeeze Fuels Silver Rally

$50 Breakout Holds as Physical Demand Drives Rally

Spot silver surged 2.2% to close at $50.21 per ounce on Friday, buoyed by safe-haven demand and strong fundamentals echoing gold’s bullish run. The rally comes just a day after prices briefly touched a record $51.22, with traders now watching the $51.24 breakout level for a possible run to $52.00 and beyond.

Silver has gained an impressive 70% year-to-date, driven by a combination of geopolitical risk, central bank accommodation, and tight physical market conditions. Friday’s price action remained within Thursday’s range, signaling investor indecision—but also setting the stage for increased volatility.

Fed Rate Cut Bets and Trump Tariff Threats Boost Safe-Haven Bid

Silver is riding the same macro tailwinds lifting gold. Former President Trump’s threat of massive new tariffs on Chinese imports roiled global markets and reignited safe-haven demand. Meanwhile, traders are now pricing in two Federal Reserve rate cuts this year, pulling Treasury yields and the U.S. Dollar Index lower.

The dollar’s 0.6% drop on Friday made dollar-denominated metals more attractive to foreign buyers, fueling both ETF inflows and speculative interest in silver. This risk-off backdrop continues to strengthen the metal’s appeal as a store of value.

Backwardation Signals Physical Squeeze in Silver Market

One of the most telling developments is the current backwardation in the silver market. December 2025 Comex silver futures were quoted at $48.03—more than $2 below the spot price—highlighting a significant squeeze in available physical supply.

“Silver’s backwardation is a loud signal — physical demand is crushing paper supply,” said Alex Ebkarian, COO at Allegiance Gold. “If backwardation holds and physical demand keeps rising, silver breaking and sustaining above $50 is very realistic.”

This rare market structure typically points to robust near-term demand and difficulty sourcing physical metal, reinforcing the bullish bias.

Technical Setup Favors Bulls, But Volatility Looms

Silver’s near-term momentum remains bullish as long as price holds above minor supports at $49.28 and $48.52. The key downside level to watch is $47.33—a break there could trigger a momentum shift lower.

On the upside, a trade through $51.24 confirms a continuation of the uptrend, with $52.00+ as the next potential target.

Silver Market Outlook: Breakout or Pullback?

The technicals and fundamentals are aligned in favor of higher silver prices. But the market is nearing critical levels where volatility can spike. A sustained break above $51.24 would open the door to $52.00 and potentially $54.00, especially if geopolitical risks or Fed easing expectations intensify.

However, traders should remain alert to pullbacks toward $49.28 or even $47.33 in the short term if bullish momentum stalls. Overall, the bias remains to the upside.

More Information in our Economic Calendar.