Silver has increased over 25% since early 2026, continuing a trend from mid-2025. The demand is supported by supply deficits and industrial needs for sectors like solar PV and EVs, with additional interest from Gold markets. The swift rise suggests caution, say OCBC’s FX analysts.
The Gold-Silver ratio dropped from last year’s high of 105 to the low-50s, showing Silver’s strong performance. While not as low as historical levels, the rapid rate of decline indicates a tactical concern. The increase in Silver isn’t due to ETF or speculative rush, as key holdings eased by 2-3% by mid-January, with non-commercial net longs dropping despite a 40% price rise.
Medium Term Bullish Outlook
Positioning isn’t crowded, supporting the medium-term bullish outlook and suggesting low risk of a leveraged market correction. Silver lease rates remain low, indicating the rally wasn’t due to tight physical supply. Despite caution due to rapid gains, the bull case is solid, with Silver at 91.23, and resistance at 98.70 and 103.20 levels. The trend encourages buying on dips, while support levels are at 84 and 75.
Silver has jumped over 25% since the new year began, continuing the powerful move we saw build in the second half of 2025. This rally is supported by a persistent supply shortage, with reports from late last year projecting a fourth consecutive annual deficit exceeding 150 million ounces. Industrial consumption remains a key driver, especially with solar panel demand for silver having broken records in 2025.
Despite the strong fundamentals, the speed of this recent price surge suggests we should be cautious in the immediate term. The daily RSI indicator is now in overbought territory, hinting that a temporary pause or pullback could be coming. We’ve also watched the gold-to-silver ratio collapse from its 2025 highs near 105 down to the low 50s, a sign of how quickly silver has outperformed gold.
Trading Strategy and Market Sentiment
However, this rally does not appear to be a speculative bubble, which is very reassuring for the medium term. Data shows that holdings in major silver ETFs have actually decreased by 2-3% since late December, and the latest CFTC report from January 6th showed fewer speculative net long positions than a month earlier. This tells us the market is not overly crowded, reducing the risk of a sharp sell-off from leveraged traders.
For those trading derivatives, this setup suggests that buying into any price weakness is the preferred strategy rather than chasing the market at these levels. With the latest inflation data for December 2025 coming in at 3.5%, the backdrop for precious metals as an inflation hedge is solid. We would view a dip toward the $84 support level as a potential opportunity to enter new long positions or purchase call options.
The broader bullish trend remains firmly in place, even if a short-term consolidation is needed. Key upside resistance targets we are watching are at $98.70 and then $103.20. The underlying structural story of tight supply and robust demand has not changed.
