Silver price rebounds on 100 EMA to 2-day high amid supply concerns
Silver rallies to $30.73, fueled by industrial demand and supply concerns
Silver price continues to show strength this week, overcoming a dip earlier in the Asian session that surged to a two-day high.
A combination of supply concerns, geopolitical tensions, and expectations of dovish Federal Reserve policy have buoyed the precious metal. This robust performance, paired with rising industrial demand, sets the stage for silver’s near-term outlook, with analysts eyeing potential gains past key resistance levels.
During Tuesday's trading, silver saw a sharp decline near the $30.20 mark in the Asian session, but quickly recovered as the price found support at the 100 EMA. The metal climbed further, reaching a high of $30.73. As the European session unfolded, silver softened slightly, trading at $30.50, still showing a 1% gain from its earlier dip. This recent price movement has formed within a rising wedge pattern, a technical formation that suggests a potential breakout if silver can decisively surpass a broader bearish trendline. A break above this level could see silver targeting the $31.50 mark, a key price level.
Silver price dynamics (October 2024-January 2025). Source: TradingView.
Supply disruptions and industrial demand support silver bullish outlook
Beyond technical patterns, supply concerns continue to drive silver prices. Fears of tariffs disruptions, particularly following President Trump's inauguration have become a key risk, further boosting premiums for silver futures as traders brace for potential market interruptions. Additionally, silver’s price is being supported by concerns about supply shortages, especially within London vaults, creating a sense of scarcity in the market.
On the demand side, silver's industrial uses, especially in manufacturing, remain strong and bolsters its appeal. The metal also benefits from expectations of interest rate cuts by the Federal Reserve. Lower rates could weaken the US dollar, further encouraging demand for commodities, including silver. Therefore, silver’s near-term outlook remains positive, with multiple supportive factors in play, from strong industrial demand to supply disruptions and a potentially weaker dollar.
Silver displayed mixed performance as anticipation of President-elect Donald Trump’s policies weighed on market sentiment. Silver recovered slightly on January 20, rising to $30.37.
