Key Highlights:
- Gold-to-Silver ratio spikes above 105, signaling a rare buying opportunity for silver to outperform gold.
- Silver faces a projected 117 million ounce supply deficit, marking the fifth consecutive year of tight market conditions.
- U.S. dollar slumps to a three-year low, boosting safe-haven demand for silver and precious metals.
Silver Market Overview: Dollar Weakness and Trade Hopes Boost Bullish Sentiment
Silver (XAG/USD) ended the week on a strong note as the U.S. dollar collapsed to its lowest level in three years. While gold briefly crossed the $3,500 milestone before retreating, silver showed remarkable resilience, underlining growing investor interest.
The sharp drop in the U.S. dollar, triggered by mounting political pressure on the Federal Reserve and renewed global trade tensions, has significantly strengthened the appeal of hard assets like silver.
Silver Price Technical Analysis: Bulls Hold Key Support
On the weekly chart, silver closed just above the 52-week moving average at $30.72, now acting as critical support.
The technical outlook suggests that silver has a clear path toward $34.59 to $34.87, provided a strong catalyst emerges. Traders are closely watching whether silver can capitalize on the recent bullish momentum to break higher.
Political Instability and Fed Uncertainty Fuel Demand for Silver
Silver’s rally was further fueled by political drama in the United States. Former President Trump openly criticized Fed Chair Jerome Powell, demanding immediate rate cuts and raising alarms over the Fed’s independence.
Despite Trump’s later reassurance that Powell would not be removed, the uncertainty rattled equity markets, sending investors fleeing into safe-haven assets like silver.
Gold-to-Silver Ratio: A Strong Buy Signal for Silver?
One of the most compelling bullish signals is the gold-to-silver ratio soaring past 105, reaching levels last seen during the COVID-19 market panic.
Historically, extreme ratios above 100 have often preceded massive rallies in silver. Analysts highlight that after the previous peak, silver outperformed gold at a 3:1 ratio. With the long-term average closer to 60, silver remains deeply undervalued — attracting strategic, long-term buyers.
Easing Trade Tensions Boost Silver’s Industrial Outlook
Midweek, sentiment improved as President Trump softened his tough rhetoric on tariffs. Treasury Secretary Scott Bessent hinted at a possible reduction in U.S.-China trade barriers, while China offered tariff exemptions on certain U.S. goods.
A de-escalation of the trade war would support industrial metals like silver, especially considering silver’s crucial role in technology, electric vehicles, and renewable energy sectors.
Tightening Supply Fundamentals Support Higher Silver Prices
Adding to silver’s bullish case is the looming supply shortage. The Silver Institute projects a 117 million ounce global deficit for next year, marking the fifth straight year of supply tightness.
Continued inventory drawdowns, driven by increasing green energy investments, are creating a solid floor under silver prices even amid broader market volatility.
Silver Price Outlook: Bulls Eye Further Upside
Looking ahead, silver remains well-positioned for continued strength:
- The record-high gold-to-silver ratio suggests mean reversion could drive substantial gains.
- Weaker U.S. dollar and potential Fed policy shifts may fuel additional bullish momentum.
- Easing global trade tensions could unlock renewed industrial demand for silver.
- Persistent supply deficits provide long-term fundamental support.
Short-term, traders should monitor the U.S. dollar’s performance and developments in U.S. monetary policy for fresh trading cues. With its dual role as both a safe-haven and an industrial asset, silver offers one of the strongest risk-reward profiles heading into the next trading sessions.
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