Silver prices have risen more than 25% since early 2026, continuing a trend that started mid-2025. This surge is driven by supply shortages and rising demand from industries like solar panels and electric vehicles (EVs), along with increased interest from the gold market. OCBC’s FX analysts advise caution due to the rapid increase. The Gold-Silver ratio fell from last year’s high of 105 to the low 50s, which highlights Silver’s strong performance. Although it’s not at historical lows, the quick decline raises concerns. The recent rise in Silver isn’t due to a rush into exchange-traded funds (ETFs) or speculative buying; major holdings decreased by 2-3% by mid-January, and non-commercial net longs declined despite a 40% price increase.

Medium Term Bullish Outlook

The market positioning isn’t crowded, suggesting a positive outlook for Silver in the medium term and a low risk of a market correction. Silver lease rates are low, indicating that the rally isn’t because of tight physical supplies. While we should be cautious about the swift gains, the bullish case remains strong, with Silver currently at 91.23. Key resistance levels are at 98.70 and 103.20, while support levels are at 84 and 75. This trend encourages buying on dips. Since the start of the year, Silver has surged over 25%, continuing the robust growth from the second half of 2025. This increase is backed by a continued supply shortage, with projections from last year indicating a fourth consecutive annual deficit of over 150 million ounces. Industrial demand, especially for solar panel production, is at an all-time high. Even with solid fundamentals, the rapid price increase calls for caution in the short term. The daily RSI indicates that Silver is now overbought, suggesting a possible pause or pullback ahead. Additionally, the gold-to-silver ratio has plummeted from its 2025 peak near 105 to the low 50s, underscoring Silver’s exceptional performance against gold.

Trading Strategy and Market Sentiment

Fortunately, this rally does not seem like a speculative bubble, which is a positive sign for the medium term. Data reveals that holdings in major Silver ETFs have dropped by 2-3% since late December, and the latest CFTC report from January 6th indicates fewer speculative net long positions than a month ago. This means the market isn’t saturated, lowering the risk of a sharp sell-off by leveraged traders. For those trading derivatives, it’s wise to consider buying during price dips rather than chasing prices at current levels. With December 2025 inflation data recorded at 3.5%, precious metals remain a solid hedge against inflation. A drop towards the $84 support level could be an excellent opportunity to enter new long positions or buy call options. The overall bullish trend is still strong, even if we face a short-term consolidation. We’re monitoring key resistance levels at $98.70 and $103.20. The underlying issues of tight supply and strong demand remain unchanged. Create your live VT Markets account and start trading now.

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