... Trade Reviews Silver sets record high amid rising demand factors

Silver sets record high amid rising demand factors

Silver futures contract has reached a new historical high amidst a confluence of factors where investors, producers, hedgers, and speculators are actively seeking the precious metal.

The silver futures contract appreciated by 5.25%, accumulating a 122% gain year-to-date (YTD) amidst concerns regarding geopolitical tensions and the health of the global economy.
Furthermore, the designation of silver as a critical mineral is bolstering demand from producers and hedgers.
The prevailing trend in silver prices is bullish; however, the asset is exhibiting strong momentum that may be highly sensitive to significant fluctuations given its inherent volatility.

Demand for silver rises amid a mix of value-driving factors

The silver futures contract (SIH26) rose by 5.25% to $66.64 per ounce, marking the highest level in its history. The precious metal has appreciated considerably over recent months amidst a high level of uncertainty regarding the global economy and escalating geopolitical tensions worldwide.

Additionally, the US government has included silver on its critical minerals list due to its essential application in semiconductors, data centres, solar cells, electric vehicles, smartphones, and other key technologies. Year-to-date, silver prices have risen by 122%, positioning it as one of the most profitable assets in the current financial landscape.

Regarding economic uncertainty, market participants are exhibiting fear following weak economic data from both the United States and China this week. On Monday, the National Bureau of Statistics of China updated its indicators for industrial production and retail sales, both of which showed deceleration—particularly in retail sales, indicating weakness in consumption. Conversely, on Tuesday, the US Bureau of Labor Statistics updated employment data, revealing weakness; most notably, the unemployment rate reached 4.6%, its highest level in the last four years.

Regarding the geopolitical overview, tensions between the United States and Venezuela are escalating significantly. According to Reuters, US President Donald Trump has ordered a blockade of all sanctioned oil tankers from Venezuela, intensifying the conflict and heightening fears of a potential supply chain disruption in oil markets.

During periods of geopolitical and trade tension, precious metals such as gold and silver tend to experience increased demand as they are viewed as relevant safe-haven assets. Furthermore, a weak labour sector in the US increases the probability of monetary policy easing by the Federal Reserve, which supports investment in non-yielding assets like gold and silver.

In addition, the inclusion of silver on the US critical minerals list is underpinning demand from industrial producers and hedgers. Nevertheless, a significant volume of speculators may be driving the metal’s prices; therefore, it is relevant to analyse the associated risk, as a defining characteristic of silver is its high volatility, making it significantly more sensitive to market shifts than other precious metals such as gold.

Technical analysis of the silver futures contract

From a technical perspective, the silver futures contract maintains a robust bullish trend and is trading above its long-term moving averages. Key observations include:

Trend context. In the long term, the silver futures contract maintains a bullish trend—characterised by higher highs and higher lows—and trades above its 50, 100, and 200-period moving averages. Bullish momentum is currently predominant in the precious metal.
Resistance levels. Should the resistance at $66.90 per ounce (the current historical high) be breached to the upside, the next significant ceiling is $70 per ounce (a prominent psychological level). A decisive break above these levels would suggest the potential for an extension into higher price zones.
Support levels. Should the support at $61.30 per ounce (short-term support) be breached to the downside, the next relevant floor is $53.60 (a structural support, the lower boundary of the upward trendline, and a level close to the 50-period moving average). A loss of the $53.60 zone would increase the probability of a deeper correction.
Momentum indicators and volume. The MACD is exhibiting a prominent bullish surge; however, the current level is considerably high in comparison to the indicator’s history. Meanwhile, the RSI indicator is demonstrating an upward trajectory but is currently situated close to the overbought zone. Additionally, the volume profile shows the Point of Control (POC) lagging below current prices, suggesting reduced liquidity and weaker volume participation at higher levels.