Silver was trading higher to start the first full week of trading of the year, and gold was bouncing off its earlier low. Though the grey metal gave back a big chunk of its gains in the latter parts of 2024, it still managed to climb 21% on the year, ending a 3-year consolidative period and finally catching up with the gold price direction. Yet, unlike gold it failed to hit any new record highs, largely due to concerns over China’s economy. Will 2025 prove to be another bullish year for silver? While there may be some short-term obstacles, I think silver looks set to climb to $35 this year, and possibly a lot higher over time. Fundamental factors to watch in 2025One factor that has been holding silver back in recent months is the slowdown in China’s economy—the world’s largest gold consumer and second largest silver consumer nation behind the US. It is important to watch Chinese data closely. If a trend of stronger-than-expected data emerges, then this would suggest that monetary support in China is finally starting to work its way through the economy, potentially resulting in higher demand for all sorts of industrial and precious metals. In the US, monetary policy is expected to stay tight in early 2025 as the Fed assesses the impact of Trump’s policies. This is likely to keep bond yields elevated and the US dollar strong, both of which are potentially significant obstacles for gold and silver. Elevated bond yields increase the opportunity cost of holding gold and silver, non-yielding asset, while a strong dollar makes silver and gold more expensive for international buyers. But after a sharp 3-month rally, the dollar index has reached a resistance zone between 109.00 to 109.50, where we might see some weakness for the greenback. Still, with the green energy drive in full motion, demand for silver is set to grow significantly in the long-term. Additionally, silver’s role as a store of value remains compelling in the face of inflationary concerns and geopolitical tensions, while haven demand for both gold and silver could offset some of the short-term weakness in key markets like China. Silver technical analysis Since peaking at $34.87, silver has made a couple of lower highs and lower lows. It has broken some key support levels in the process and moved below a few moving averages. The bullish momentum from much of 2024 has been lost in the process. But the long-term trend remains bullish, and I am now on the lookout for a fresh bull signal to emerge as prices have dipped to some technically important areas. Price action since October is reminiscent to that of May – August 2024, when the metal went on a multi-month consolidation phase after surging to a new multi-year high. The consolidation ended around mid-August, leading to a fresh rally to new multi-year highs, before peaking in October. This time, it is not yet clear whether we have reached the end of the corrective phase yet, but if and when we do, I would expect a similar sharp rally to ensue, potentially targeting $35 level. 
