Silver price projection: XAG/USD falls to $87.00 amid China's massive liquidation wave

Silver Market Shock

XAG/USD fell to about $87 per ounce on December 12, 2024, marking the steepest single‑day drop in three months. Massive liquidations by Chinese institutional investors pushed trading volume to 245 % of the 30‑day average. Analysts view the $87 level as a pivotal support that has acted as both resistance and floor in past cycles.

China‑Centric Catalysts

Chinese banks sold silver to bolster yuan liquidity, meet new capital‑adequacy rules, and react to weak industrial production, withdrawing 42 metric tons from the Shanghai Gold Exchange—the largest outflow since March 2023. The 18 % decline sits within historical correction ranges, lower than the 34 % drop in 2011 and the 41 % plunge in 2020. This suggests a potential stabilization near the current $87 zone.

Outlook and Drivers

Technical indicators show the 200‑day moving average at $89.50 as resistance, with Fibonacci supports at $86.75 and $84.20; RSI is oversold and a falling‑wedge pattern hints at a bullish breakout above $90.50. Long‑term fundamentals stay robust as solar‑panel, 5G, automotive and medical sectors expand, while mine output fell 2.3 % in 2024, creating a structural deficit. These forces could lift silver back to higher levels despite short‑term pressure.