Silver’s strong performance in 2024 sets the stage.
Silver rose 24.65% in 2024, its best year since 2010. Analysts have suggested that continued central bank purchases and ongoing geopolitical uncertainty could lead to another rally in 2025. However, the bullish momentum began to wane in November, as the dollar strengthened on optimism surrounding Trump's return to the White House.
President Trump’s policy change could limit silver’s rise
With President Trump set to take office in January, markets are bracing for higher tariffs, deregulation and tax reform. These policies could stimulate inflation and reduce the likelihood that the Federal Reserve will continue to cut interest rates aggressively.
The Fed cut interest rates in September, November, and December 2024, but has signaled that the rate cuts will be smaller in 2025 due to persistent inflationary pressures. Rising interest rates could make non-yielding assets like silver less attractive, limiting further price appreciation.
China's $411 billion stimulus package to boost industrial demand
China's announcement that it will issue $411 billion in government bonds in 2025 signals a major effort to revitalize its slowing economy. The stimulus package is aimed at infrastructure and advanced manufacturing, and is expected to boost demand for industrial metals, including silver. Markets reacted positively, with Chinese stocks rising, although bond yields rose on concerns about an increase in bond supply.
