(Kitco News) – Spot silver gained 4.6% in 10 hours on Monday to top out at $32.268 per ounce, its highest level since precious metals sold off following the U.S. election in early November. According to Eran Tal in the Jerusalem Post, the gray metal is being supported by bullish technical patterns, declining SLV short sales, and rising industrial demand, and a break above key resistance levels could trigger a powerful rally.
Tal said silver’s break back above $32 shows renewed optimism for the precious metal.
“While this surge has drawn fresh attention, it aligns with a broader trend of emerging bullish signals that could pave the way for further price gains,” Tal wrote. “Investor sentiment toward silver has been notably pessimistic in recent months. Ironically, this negative sentiment is proving to be a reason for optimism, as contrarian market dynamics often see silver bounce back during such times.”
He said that several technical and market-based indicators suggest silver may be on the verge of breaking out of its recent period of consolidation.
The first of these is a clear technical reversal pattern. “Silver has recently formed a double-bottom pattern, reinforced by three hammer candlesticks — a classic signal of a market bottom,” Tal wrote. “The metal is testing a critical resistance level at $31.50, and a breakout could open the door to even higher levels, possibly surpassing $35 and beyond.”
The second indication of silver’s strength is rising industrial and macro demand. “Growing use of silver in green technologies, such as solar panels and electric vehicles, continues to drive long-term demand,” he said. “Additionally, silver's appeal as a hedge against inflation and economic uncertainty has further strengthened its position in the current market.”
The third signal cited by Tal is the decline in the volume of short sales. “One particularly bullish sign has been the decline in short sale volume in the iShares Silver Trust (SLV), a popular ETF tracking silver prices,” he noted. “Historically, such drops have preceded significant silver rallies, similar to the one seen earlier this year.”
There are also encouraging correlations emerging between the silver price and related markets.
“The close relationship between silver and copper also plays a role in silver’s performance,” Tal said. “Copper has been hovering around its critical $4 support level, and any strong rebound in copper prices could provide additional momentum for silver.”
Silver mining stocks are also showing bullish technical patterns. “A breakout above the critical $48 to $52 zone in [the Global X Silver Miners ETF (SIL)] could confirm a bull market in silver mining stocks, further boosting silver’s overall market outlook,” he added.
Moving forward, Tal said the focus will now shift to whether the gray metal can hold above $32 per ounce and test the next levels of key resistance.
“From a long-term perspective, analysts highlight silver’s undervaluation relative to gold and historical inflation-adjusted prices, suggesting significant room for growth,” he said. “For contrarian investors and silver enthusiasts, today’s rally could mark the beginning of a broader uptrend, making it a critical time to monitor this dynamic market.”
Silver prices are seeing a fair amount of volatility on Tuesday, with spot silver hitting a session high of $32.050 at 9:50 am EST, and last trading at $31.970 for a gain of 0.50% on the daily chart.
