Will the $50 mark soon exert a magnetic effect?
Status: 02/21/2025 by Florian Grummes
Since the double bottom around $28.75 in December, the silver price has also been able to rise significantly in the wake of a strongly bullish gold price. From the low to the last price peak at $33.35, prices increased by an impressive +15.92% within seven weeks.
This continues the positive trend from the previous year. Although the important resistance level around $32.50 was recently surpassed, the silver price has so far shown no real independent life, but rather follows the gold price on its way up.
Gold Market as the Driver of the Precious Metals Rally
The spectacular bull market in gold is running like clockwork. The strong upward movement since December has been driven primarily by massive shifts of physical gold from London to New York.
In January alone, 151 tons were withdrawn from London LBMA vaults, leading to delivery delays and shortages in London. Reasons for this shift include fears of new US trade tariffs on precious metals, the announced audit of US gold reserves, and arbitrage transactions by large financial institutions.
These developments, coupled with geopolitical tensions, inflation fears, and strong demand during the Chinese New Year, continue to drive the gold price upward.
COMEX Silver Inventories, as of February 21, 2025. Source: Inproved Analytics
At the same time, the hunt for physical silver seems to be intensifying. In the US, COMEX silver inventories recently recorded a remarkable increase of 2.8 million ounces (87 tons) to a total of 388 million ounces. Even more impressive are the monthly inflows, which amount to 902 tons.
Gold and Silver Premiums in Shanghai, as of February 21, 2025. Source: Inproved Analytics
At the same time, silver premiums or surcharges in China are shrinking, while premiums on the gold price in China remain stable compared to the LBMA.
This development indicates a continued strong demand for physical silver, with focus seemingly shifting increasingly towards silver.
Shanghai Futures Exchange Silver Inventories, as of February 19, 2025. Source: Inproved Analytics
Meanwhile, the precious metals exchange in Shanghai is recording a significant decline in silver inventories in its vaults.
With an outflow of 194 tons to 1,247 tons (or 40.1 million ounces), this marks the largest single withdrawal since January 2024. In contrast, there have been large inflows into COMEX silver vaults in recent weeks.
These opposing movements between Asian and American markets could indicate a shift in global silver inventories, possibly driven by regulatory changes or arbitrage opportunities.
Silver in US Dollars – Daily Chart
Silver in US Dollars, Daily Chart as of February 21, 2025. Source: Tradingview
Since breaking out of the bullish wedge at the end of January, the silver price has continued its upward trend as expected. Step by step, prices have pushed upwards in recent weeks.
One Fibonacci retracement level after another was tested and ultimately overcome. Only the 76.4% retracement level at $33.42 remains for the bulls to clear before targeting the October high of $34.86 and the next resistance zone around $35.
As the gold price is highly likely to see the $3,000 mark in the coming weeks, there is not much standing in the way of a further rise in the silver price.
In the unexpected case of a somewhat larger pullback, the 200-day moving average ($30.49) and the 50-day moving average ($30.80) already provide strong support below $31.
Both moving averages are pulling upwards, confirming the uptrend. At the very latest, the lower Bollinger Band (30.43 US dollars) should catch any temporary price decline.
Given the intact rally in the gold market, the focus for silver must also be on the upside. In the short term, the resistance around 33.50 US dollars.
Over the coming weeks, however, the silver price should begin to catch up. It could then deliver a breathtaking performance and surge towards 38, 40, 45, and 50 US dollars.
In summary, the silver market is on the verge of breaking out of its shadowy existence.
While the gold price is rushing from one all-time high to the next, silver is still trading about 34% below its all-time high from 1980! There’s plenty of catching up to do here.
Despite some false starts, momentum in the silver market continues to build, and we expect steep price increases in the coming weeks and months.
Our price target remains the psychological mark of 50 US dollars, which should soon exert a magnetic effect.
Author: Florian Grummes
Technical Analyst, Precious Metals Expert
