Silver (XAG) Forecast: Silver Rally Eyes $40 After Clearing Major Resistance at $36.89

Is $40 Silver the Next Stop After Clearing Major Resistance?

Silver is gaining attention across trading desks after breaking above key resistance at $36.89, pushing to multi-year highs with a 23.3% year-over-year gain. The June 17 print at $37.24 reflects the strongest price action in over a decade, fueled by sustained physical demand, industrial offtake, and tightening technicals. Minor support is now confirmed at $35.46, while additional zones at $35.40 and $34.87 offer firm near-term bases.

On the technical side, silver continues to show strength across all timeframes. Traders are now eyeing the next major target at $38.34—the 161.8% Fibonacci extension—before a run toward the psychological $40.00 mark. The 50-day moving average at $32.40 remains the main line of deeper support, suggesting buyers have plenty of room to defend the trend.

Industrial Demand Outpaces Supply for Fifth Straight Year

The case for higher silver prices is rooted in a clear supply-demand imbalance. Industrial fabrication demand is projected to grow another 3% in 2025, potentially surpassing 700 million ounces—a record. In 2024, demand hit 680.5 million ounces, the fourth straight annual high. Despite a projected 2% uptick in global supply and a 1% decline in overall demand this year, the deficit is still expected to total 117.6 million ounces—marking the fifth consecutive year of shortfall.

Much of the demand is driven by the solar sector, which now consumes nearly half of all silver used in electronics. Even with political headwinds in the U.S., global solar installations are set to reach new highs in 2025. Cumulative silver deficits since 2021 now exceed 474 million ounces, underscoring the persistent squeeze on physical availability.

Gold/Silver Ratio Breaks Lower: A Catch-Up Rally in Progress?

The gold-silver ratio continues to normalize after trading above 100 earlier this year, pointing to a significant revaluation for silver. Recent compression to the 92–94 range suggests the white metal is in the early stages of a catch-up move. Historically, extreme GSR readings have preceded periods of silver outperformance. In 1992 and post-2020, similar levels led to 50–140% rallies in silver.

Rate Cuts, ETF Inflows, and Central Bank Buying Add Fuel

Silver’s breakout is further supported by macro tailwinds. Expected Fed rate cuts this year are adding to the bullish tilt across the precious metals space. Institutional interest is also rising, with silver ETF holdings up 2.2 million ounces in a single day last week. Russia’s announcement to acquire $535 million in silver over the next three years marks the first time a central bank has openly entered the silver market in this bull cycle.

Market Forecast: Silver Poised to Test $40

With technical levels clearing and fundamentals aligning, silver appears well-positioned to test $40 in the near term. The compression in the gold-silver ratio, coupled with sustained industrial demand and structural supply deficits, provides a strong tailwind. As institutional flows increase and central banks take notice, silver may finally be stepping into a prolonged revaluation phase.

More Information in our Economic Calendar.