Silver (XAG) Forecast: Silver Rally Eyes Record as Fed Bets and Supply Squeeze Fuel Bulls

Silver Eyes Record Territory as Fed Pivot and Supply Squeeze Collide

Spot Silver pushed to $54.41 Friday morning — a little below the October 17 multi-year high at $54.49 — and the message is clear: buyers aren’t backing off. Thin post-holiday liquidity may cap the breakout today, but the setup still favors continuation.

The 50-day moving average at $49.36 is the floor that matters. As long as it holds, dip-buyers will keep stepping in. This week alone, silver is tracking a 2.7% gain, and the month is shaping up as a 13%+ run. Year-over-year, silver is up more than 76% — the kind of move you see in a real bull phase, not just a safe-haven bid.

At 14:28 GMT, XAGUSD is trading $54.80, up $1.42 or +2.65%.

Fed Repricing Does the Heavy Lifting

Gold is telling the same story. Spot is grinding above its 50% retracement at $4,133.95, and traders have bid December cut odds to 85% — up from 50% just a week ago. That repricing accelerated after dovish signals from Fed Governor Waller and New York Fed President Williams, plus a string of softer U.S. data. Lower yields and a weaker dollar are textbook tailwinds for metals, and silver is running harder than gold because it always does when conviction builds.

The dollar is on pace for its worst week since late July, which makes bullion cheaper for foreign buyers and adds fuel to an already strong bid.

Industrial Demand Is the Structural Story

This is where silver separates from gold. Industrial fabrication is forecast to grow 3% this year, with volumes on track to surpass 700 million ounces for the first time. Solar is the engine — panels require 15–25 grams of silver each, and global installations keep hitting new highs. EVs pile on top, using up to 50 grams per vehicle as the sector scales.

Meanwhile, mine production has contracted at a 0.9% annual rate since 2020. Output is down roughly 7% since 2016, and the market is on track for its fifth consecutive annual deficit. That’s not a cyclical blip — it’s a structural squeeze. Physical users can’t afford to wait, which is why dips keep finding buyers.

China Tightens the Screws

The wild card this month came from China. Shanghai Futures Exchange stockpiles dropped to decade lows, and record October exports — more than 660 tons — drained domestic inventories to ease tightness in London. Shanghai flipped into backwardation, a textbook signal of near-term pressure. Tax changes nudged some retail demand toward silver, and the result is another layer of heat on an already tight global market.

Outlook: Bulls Hold the High Ground

The gold-silver ratio is stuck in the low 80s, which still suggests silver is undervalued relative to its yellow cousin. The fundamentals are stacked in favor of higher prices: a Fed ready to cut, a dollar rolling over, industrial demand that doesn’t quit, and inventories that keep shrinking.

A clean break above $54.49 opens the door to price discovery in uncharted territory. Failure to hold would likely find support near the 50-day moving average — a level that has defined “buy the dip” all year.

Bottom line: After an 80% run, some profit-taking is inevitable on sharp moves. But the market wants to stay long. Expect firm bids on weakness — and fast moves when momentum picks up.

More Information in our Economic Calendar.