Silver is up more than 1.5% today, with the spot market still looking tight. It is worth noting, however, that this is not the only catalyst that can shape the next leg of the trend. Silver borrowing rates currently stand at 7.3%, but they were multiple times higher in the autumn, and have eased slightly in recent weeks.
- Given supportive fundamentals such as a structural deficit, solid industrial demand (boosted by data centers and the broader technology expansion), the ongoing rally in gold, and geopolitical tensions (Ukraine, Iran), it is not out of the question that silver could move toward the upper boundary of its rising channel, around USD 82 per ounce.
- On the other hand, a key near-term risk is a potential rebalancing by commodity funds tracking broad benchmarks such as the Bloomberg Commodity Index. Following the recent rally, these funds reportedly reduced silver’s allocation within their buying mix from roughly 9% to below 3.5%, and possibly as low as 1.5% under more aggressive estimates. The rebalancing window runs from January 8 to January 14 and could translate into selling of approximately USD 4 billion to as much as USD 7 billion, potentially lifting volatility by several to even more than ten percent.
Beyond the rebalancing factor, the U.S. dollar remains an additional headwind. The dollar has been performing well recently, while the data suggest the Fed may remain cautious about cutting rates in the first half of 2026. That said, this is partly offset by “dovish” forces coming from the U.S. administration and Donald Trump, including the proposed USD 200 billion MBS purchase and the recently floated USD 1.5 trillion Pentagon budget. It would be difficult for the U.S. to finance an additional “above-normal” USD 500 billion without widening the deficit.
Silver (H1, D1)
Silver continues to climb, breaking above both the EMA200 and EMA50 (red and orange lines). A potential move toward the upper boundary of the price channel implies upside of roughly 5% from current levels. At the same time, the broader market picture suggests profit-taking pressure may gradually build after such a powerful rally.
Source: xStation5
Source: xStation5
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