Silver price dips 11% in eight days amid strong U.S. GDP data
EV demand supports silver’s long-term bullish prospects
Silver prices have seen a dramatic 11% drop over the past eight days, as recent data from the U.S. points to a stronger economic outlook, sending the precious metal into a steady decline.
From last week's high of $32.30, silver reached a low of $28.75 on December 19, with a brief rally interrupted by resistance at $29.65.
Silver price dynamics (September-December 2024). Source: TradingView.
The pullback in silver prices can largely be attributed to better-than-expected U.S. GDP data, combined with a decrease in jobless claims, both of which have bolstered the U.S. dollar. A stronger dollar typically reduces the appeal of precious metals like silver, which are often viewed as safe-haven assets in times of economic uncertainty. The rally attempted on December 19 at $29.65 faltered, with the resistance level capping the upside and driving prices lower to the $28.75 level
Currently, silver trades near $29.00, and technical indicators paint a picture of an oversold market, with the RSI showing deep negative momentum. However, near-term support appears to hold at $28.60, offering some relief to traders seeking an entry point.
Long-term demand for silver in EV sectors to shape silver outlook
Looking ahead, analysts remain optimistic about silver's long-term outlook. According to a World Bank report, silver prices are expected to rise by approximately 7% in 2025 and another 3% in 2026. This expected growth is driven by the increasing demand for silver linked to the expansion of sustainable energy initiatives, such as solar power, and the electric vehicle sector. These sectors are projected to drive silver consumption, offering a buffer against the current bearish price action.
As silver continues to face challenges from the stronger dollar, its longer-term prospects driven by industrial demand offer a compelling case for those looking to hedge and benefit from future price gains.
Silver prices faced significant downward pressure, driven by the Federal Reserve's cautious stance on future rate cuts. The immediate impact was a break below the key support level of $29.65.
