Silver (XAG) Forecast: Fed Cut Bets Power Silver Rally as China Tightens Supply

Silver Pushes Higher as Rate-Cut Bets Stack Up

Spot Silver (XAGUSD) kept its momentum into Thanksgiving week, and the rally told a clear story: buyers stayed active, and the Fed did most of the heavy lifting. Spot hit $53.39 on Wednesday — up more than 3.50% on the day — and the month-long run now sits near 13.5%. Year-over-year, silver’s up more than 75%. Big number, but it tracks: silver tends to sprint when the metals space is in a real bull phase, not just a safety grab.

Fed Tone Keeps Bulls in Control

The week kicked off with silver holding near $50 and traders leaning into aggressive December rate-cut odds. Soft labor data and a dovish push from New York Fed President John Williams helped drive the probability of a third cut this year from roughly 40% to above 80%. That’s exactly the kind of backdrop silver likes — lower yields, softer dollar, and the sense that the Fed is finally comfortable easing.

By Tuesday, the move had legs. Indian benchmark prices jumped more than 2%, and global markets responded to weaker U.S. retail sales and slipping consumer confidence. Into Wednesday, silver pushed through the low-$52s before touching $53.39 in quiet holiday trade. The buying wasn’t frantic — just steady.

Industrial Demand Isn’t Letting Up

This is where silver separates itself. Industrial demand now makes up nearly 60% of total use, and the solar sector is a machine. Panels need 15–25 grams of silver; scale that to 500 gigawatts of annual installations, and you’re talking about demand that can chew through 250 million ounces a year. EVs add another layer — each one uses up to 50 grams, and the sector’s still ramping.

Supply isn’t keeping up. Mine output is down about 7% since 2016, and the market is staring at its seventh straight deficit. That’s the kind of setup that keeps dips shallow because physical users don’t have the luxury of waiting.

China Adds Fuel to the Tightness

The twist this week came from China. Stockpiles tied to the Shanghai Futures Exchange dropped to their lowest level in a decade, and record October exports — more than 660 tons — drained domestic inventories to ease a squeeze in London. Shanghai even flipped into backwardation, a clean sign of short-term pressure. Add in a tax change that nudged some retailers toward silver, and it’s not shocking that China’s demand pulse is adding heat to an already tight market.

Outlook: Bulls Still Have the Ball

With the gold-silver ratio stuck in the low-80s, silver still looks undervalued relative to gold. The fundamentals lean bullish: soft U.S. data, heavy industrial pull, tight inventories, and a Fed that’s likely to cut on December 10.

Bottom line: the market wants to stay long. But after an 80% year, it won’t take much for traders to book profits on sharp moves. Expect firm interest on dips — and fast swings when liquidity thins.

More Information in our Economic Calendar.