Silver price rise of 7 consecutive days capped by Fib 50% amid strong dollar
Market forces continue to impact silver
Silver has shown impressive resilience at the start of 2025, with a streak of seven consecutive up-close days since the beginning of the year.
However, despite these gains, the metal has faced challenges in maintaining upward momentum, primarily due to significant resistance at key technical levels. As the second week of January unfolds, market forces continue to impact silver, offering a mixed outlook for the near term.
The metal’s price performance has been characterized by consistent intraday highs, with silver repeatedly testing resistance at the 100-day Exponential Moving Average (EMA), currently at $30.40 per ounce. On Friday, January 10, silver briefly surpassed this level, reaching $30.65, but faced a strong cap at the Fibonacci 50% retracement level, which led to a retracement back below $30.40. As of the European session on January 13, silver had declined sharply to $30.10 before stabilising around $30.30. This shows the difficulty in maintaining gains above the critical $30.40 mark.
Silver price dynamics (October 2024-January 2025). Source: TradingView.
Silver price weighed by US labour market data as RSI signals upside
Looking at silver's Relative Strength Index (RSI) on both the daily and 4-hour chart, it has remained above 50 in recent days, pointing to continued upward strength. However, the broader macroeconomic backdrop poses headwinds. The strengthening of the US dollar, compounded by rising US bond yields, has weighed on the price of USD-denominated commodities like silver.
Moreover, the Federal Reserve’s indication of a slower pace of rate cuts in 2025, driven by persistent inflation and a robust labor market, could further dampen silver's price potential in the near term. On January 5, the US Bureau of Labor Statistics reported that Nonfarm Payrolls surged by 256,000 in December, surpassing expectations, while the Unemployment Rate dipped to 4.1% from 4.2%, adding pressure to the silver market.
Despite these challenges, silver’s outlook is not entirely bearish. The demand for silver remains robust, particularly in industrial applications such as electronics, electric vehicles, and solar panels, with total demand projected to reach 1.21 billion ounces in 2025. This demand could help support prices and provide a buffer against further losses.
Silver price reached a 3-week high of $30.46 on January 9th, despite resistance at the 100-day EMA. Rising U.S. bond yields and shifting Federal Reserve policy expectations constrained Silver's upside potential.
