On Friday, January 3rd, during the European trading session, silver prices rose for the second consecutive trading day, trading below $29.80. At present, the interest in silver in the market has increased significantly, which is mainly driven by favorable economic conditions, the decline in the yield of US treasury bond bonds and the continued demand for risk aversion. White silver is approaching the critical 200 day moving average, which analysts believe could become an important catalyst for further gains.

Low yield and support from industrial demand

UBS analysts point out that the decline in US real yields and the strengthening of global industrial production provide strong support for silver's performance in 2025. These factors are expected to drive demand for silver, strengthening its dual role as an industrial metal and value storage tool. UBS expects silver prices to remain between $36 and $38 per ounce in 2025, reflecting market confidence in economic recovery and increased industrial activity.

Silver has a wide range of industrial uses, including applications in new energy, electronic products, and clean energy technologies, which directly benefits silver demand as global industrial activity rebounds. At the same time, the cautious interest rate cut attitude of the Federal Reserve in 2025 may cause the yield of US treasury bond bonds to continue to decline, which may further reduce the opportunity cost of holding non yielding assets (such as precious metals) and provide additional support for silver and gold.

Geopolitical uncertainty intensifies the demand for safe haven

The recent geopolitical events have significantly boosted the market's demand for safe haven assets. For example, Israel's airstrikes on Gaza have increased market uncertainty. These risk events typically prompt investors to purchase safe haven assets such as gold and silver, providing support for price increases.

In addition, the market is beginning to reprice potential inflationary pressures in the future, partly due to the potential impact of global fiscal policies. Inflation pressure may increase due to supply chain bottlenecks and rising raw material prices, and silver and gold are often seen as important tools to combat inflation. Against the backdrop of a possible shift towards high inflation in global economic conditions, demand for silver is expected to further increase.

Overall, analysts believe that from a fundamental perspective, the price of silver will continue to be supported by multiple factors such as low yields, increased industrial demand, and geopolitical uncertainty in the future. Driven by both risk aversion and economic recovery, silver is expected to continue its strong performance.

In terms of technology, analyst Hyerczyk provided the following interpretation:

From a technical perspective, silver prices are currently approaching the key 200 day moving average, which is around $29.83. This level is an important technical barrier that the market is concerned about. Once effectively broken through, it may trigger more buying and drive prices further up.

Test the 200 day moving average

The daily chart of silver shows a clear upward momentum as the price approaches the 200 day moving average. A breakthrough at this level may open up new upward space, with the next target level being $30.54, which is the 50% Fibonacci retracement level of the current trend. If the price can successfully break through $30.54, it may further stimulate the bullish sentiment in the market, thereby accelerating the upward momentum.

However, if the price fails to break through the 200 day moving average, it may lead to consolidation near that level, and even a pullback to the support level around $28.75. Consolidation or pullback will provide more confirmation signals for the market to determine the direction of future price trends.

Performance of technical indicators

The current 14 day Relative Strength Index (RSI) shows that prices have some upward momentum, but have not yet reached overbought levels, indicating that there is still room for the upward trend to continue. At the same time, the MACD indicator gradually approaches the zero axis, indicating a weakening of bearish momentum and a gradual increase in bullish momentum.

In terms of moving averages, silver prices have surpassed the 20 day moving average ($29.50), further supporting short-term bullish views. If we can successfully break through the 200 day moving average ($29.83) and stand firm, the price may test a higher level of the 50 day moving average ($30.90), which will be a key resistance level in the medium term.

Support level and resistance level

From the support level perspective, $28.75 (the recent pullback low) is an important defensive area for silver prices. If the price falls below this level, it may trigger further selling pressure, pushing the price towards lower support levels around $27.50.

From the resistance level, the 200 day moving average of $29.83 is the primary target, followed by the 50% Fibonacci retracement level of $30.54 and the 50 day moving average of $30.90. If the price can break through these levels, it may further test the psychological barrier of $31.50.

conclusion

Based on a comprehensive analysis of fundamental and technical factors, silver shows strong upward potential in the current market environment. From a fundamental perspective, low yields, increased industrial demand, and geopolitical uncertainty collectively provide support for silver. From a technical perspective, silver is about to test the key 200 day moving average, and breaking through this level may open up space for further upward movement.

However, analysts remind that market uncertainty still exists, especially in the case of technical failure to effectively break through resistance levels, which may lead to short-term pullback risks.