Market Minute: Silver Attempting a Technical Breakout
Often considered the alternative to gold, silver is now only a few cents away from completing a potential technical breakout above its October 2024 highs of $35.07/oz. While both precious metals Often considered the “next best thing” to gold, silver futures (/SI) are now only a few cents away from completing a potential technical breakout above its October 2024 highs of $35.07/oz. While both precious metals have had a strong start to the year—with gold (/GC) futures up 14.67% and silver close behind at 13.90% year-to-date—the technical landscape for each tells a different story.
Gold has been riding a steady, well-defined uptrend with minimal retracement, reflecting broad investor confidence and consistent bullish sentiment along with uncertainty about the global macroeconomic environment. Silver, on the other hand, has taken a more methodical path higher. It has shown multiple periods of consolidation, pulling back to retest its primary trendline before continuing its upward movement—an indication of a more cautious but structurally sound uptrend.
Silver holds a unique position in the commodity space, exhibiting characteristics of both a precious and industrial metal. This dual nature means its price is influenced by both safe-haven demand and broader macroeconomic trends. Approximately one-third of the global annual silver supply is consumed in electronics manufacturing, highlighting its importance as a component of industrial production. This makes silver not just a hedge against inflation like gold, but also a proxy for global economic activity.
In addition to industrial and investor demand, the physical silver market is experiencing a structural deficit. When factoring in consumption from electronics, demand for physical storage, and ETF holdings, the current supply levels fall short of meeting total demand—potentially adding to upward price pressure if the deficit persists or worsens.
Lastly, silver is also benefiting from renewed optimism around economic stimulus measures in China. As one of the world's largest consumers of industrial metals, positive sentiment around China’s economic trajectory tends to lift silver demand. With increasing expectations for consistent growth signals in Chinese economic data, silver traders have turned cautiously optimistic positioning themselves ahead of what could be a larger trend driven by industrial demand and macro tailwinds.
Silver is sitting at the intersection of technical development and fundamental support. A confirmed breakout above the October highs could open the door for further upside, especially if macroeconomic conditions and industrial demand continue to align.
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Charles Schwab and all third parties mentioned are separate and unaffiliated, and are not responsible for one another's policies, services or opinions.
