Silver (XAG) Forecast: Bullish Silver Analysis as Trade War Fuels Safe-Haven Demand

Silver Hits 14-Year Highs as Trade, Fed, and Supply Factors Converge

Silver (XAG/USD) rallied to its highest level since 2011 during the July 6–12 trading week, reaching an intraday peak of $38.54 per ounce on July 12. The metal surged 1.93% on July 11 alone, decisively breaking resistance at $37 and shifting into a higher trading range.

The rally was powered by dovish Federal Reserve signals, intensifying trade tensions under the Trump administration, and deepening structural supply deficits—conditions that collectively triggered a broad move into precious metals.

Fed Signals Fuel Rate Cut Bets

Markets responded strongly to the July 9 release of Fed minutes from the June 17–18 meeting, which showed widespread support for rate cuts in 2025.

Governors Bowman and Waller openly backed reductions as early as the July 29–30 meeting, provided inflation stayed contained.

Treasury yields fell in response: the 10-year closed at 4.41% on July 11, while the 2-year yield hit 3.75% in late June—its lowest since early April.

Falling yields lowered the opportunity cost of holding non-yielding assets, supporting flows into silver and gold.

Tariff Shock Triggers Safe-Haven Demand

Trade tensions spiked after President Trump’s tariff announcements across multiple fronts.

On July 7, 14 countries received letters imposing new reciprocal tariffs between 25% and 40%. Japan, South Korea, Cambodia, and Thailand were among the targets.

The Dow dropped 667 points (1.48%) as markets reacted. On July 8, Trump escalated further by threatening 200% tariffs on pharmaceutical imports and adding a 50% copper tariff.

By week’s end, new 30% tariffs on EU and Mexican goods were announced, stoking inflation fears and adding to safe-haven flows.

Industrial Demand, Supply Deficit Underpin Rally

Silver entered its fifth straight year of supply deficit in 2025, with the shortfall projected at 117.6 million ounces. Solar panel demand alone is expected to consume 225 million ounces, or 14% of total usage.

Broader industrial demand—driven by AI applications, EV production, and grid upgrades—is forecast to exceed 700 million ounces for the first time. These trends reinforced the rally’s structural foundation.

Breakout Confirmed, Positioning Remains Bullish

Silver broke out of a converging triangle at $36.80 on July 10, supported by strong volume. It established short-term support at $37.31 and deeper support at $35.25 (38.2% Fibonacci retracement).

The gold-silver ratio compressed to 90:1 from above 105, still well above the 25-year average of 66. SLV drew $451 million in inflows over eight straight weeks.

Futures data showed large speculators holding 62,947 net long contracts, down modestly from the prior week.

Outlook

Silver enters the second half of July in a firmly bullish posture. With central banks leaning dovish, trade volatility persistent, and industrial fundamentals tightening, conditions continue to favor higher prices.

Near-term upside remains in play while support holds above $37.

More Information in our Economic Calendar.