The iShares Silver Trust (SLV) had modest returns in 2024 as gold and silver became some of the top-performing commodities of the year. The SLV ETF rose by 24%, making it one of its best years in a long time. So, what next for silver prices in 2025?
While silver price has retreated
Silver price and the SLV ETF have pulled back and entered correction territory in the past few months. It has dropped by over 14% from the year-to-date high, erasing some of the gains made earlier this year.
Silver’s retreat has been more pronounced than gold’s, which fell by over 6% from the year-to-date high. The two have dropped mainly because of profit-taking among investors.
They also retreated because of the Federal Reserve, which delivered its last monetary policy decision of the year.
In that meeting, the Federal Reserve slashed interest rates by 0.25%, bringing the yearly cuts to 1%. The bank, however, warned that inflation was a major challenge, especially as Donald Trump prepares to become president.
The Fed, therefore, expects to deliver two interest rate cuts in 2025, much lower than the previous guidance of 4. In a note on Monday, analysts at UBS predicted that the bank will deliver the first cut in June and the next one in December.
However, there are still hopes that the Fed will deliver more than two cuts, especially if the economy deteriorates. For example, a report released by the Conference Board on Monday showed that consumer confidence crashed this month.
Silver and gold do well when the Fed is dovish, a move that often leads to a weaker US dollar. The US dollar index has recently jumped sharply and moved to $108.50, its highest level since November 2022.
Catalysts for silver price in 2025
The first catalyst for silver price is that the Federal Reserve makes more cuts to prevent the American economy from moving into a hard landing. Historically, the Fed does not always live up to its expectations on cuts. For example, in December last year, the bank hinted that it would deliver more cuts this year as recession risks rose. Instead, it implemented just three cuts.
The other catalyst is the soaring US debt, pushing investors to an alternative asset like gold. Data shows that the US public debt has jumped to over $36.3 trillion, a trend that will accelerate under Trump.
Trump has pledged to deliver more tax cuts, widening the already large trade deficit. Just last week, he pressured Republicans to remove the debt ceiling for two years, a move that will help him cut taxes, especially for the wealthy.
The risk is that the market will react negatively as it did when Lizz Truss passed unfunded tax cuts in the UK. If this happens, then gold will be a key beneficiary because it has withstood the test of time in the past few years. Silver often has a close correlation with gold.
SLV ETF analysis
SLV chart by TradingView
The other catalyst for the SLV ETF is its technicals. The weekly chart shows that the SLV ETF formed an inverse head-and-shoulders pattern between September 2021 and May 13, one of the most bullish patterns in the market.
The fund has remained above the 50-week moving average. It has also formed a series of higher highs and higher lows. The fund has remained above the ascending trendline that connects the lowest point in June last year.
Therefore, the SLV ETF will likely continue rising in 2025. If this happens, the next important resistance level to watch will be at $31.78. A move above that level will point to more gains in 2025.
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