(Kitco News) - In what has been a historic rally, silver has hit what has been a much-anticipated target since the second half of last year. The precious metal is looking to end the week above $100 an ounce.
Spot silver is on track to end the week up 12%, following last week’s 12% rally. While the price action looks wild and frothy, many analysts have said that these elevated prices make sense in a world facing extreme geopolitical and economic uncertainty.
Analysts say that both gold and silver’s rallies, while extremely overextended, are being driven by solid fundamentals.
In an interview with Kitco News, Chris Vecchio, head of futures strategies and forex at Tastylive.com, said that there is solid demand for assets that are not tethered to the fiat world.
“ You're not really gonna go into silver if you're a central bank. It's just too tethered to industrial processes. But if you're an institution or a private investor, silver has been the attractively cheap little brother in the precious metals,” he said. “ The U.S. dollar doesn’t bedrock foundational trust that it once did so investors are turning to alternative real assets.”
Paul Williams, Managing Director at Solomon Global, said that he sees silver’s momentum continuing to be driven by sustained industrial demand, rising retail investor interest (and FOMO), safe-haven appeal, and an increasing structural supply deficit.
“With gold priced out of reach for many, silver has emerged as an accessible way to gain exposure to the precious metals boom,” he said. “Looking ahead, $120 is a potential target in 2026 as the factors that have contributed to this rally are likely to continue. Silver’s safe-haven appeal shows no sign of fading as geopolitical tensions continue. We would not expect the supply deficit to ease much, if at all, as green technologies such as solar and EVs, alongside AI, are continuing to drive demand for the metal.”
Although silver has the potential to move higher, analysts are also warning investors that this rally does come with some risks.
Williams noted that given silver’s volatility, prices could easily swing 10% in a single day.
“The higher the price, the more volatile it is likely to become. Profit taking might also tarnish silver’s shine,” he said.
Vecchio said that he has taken profits in most of his silver positions to avoid the impending volatility. He added that he has been long silver since November.
Michele Schneider, Chief Market Strategist at MarketGauge, said in a comment to Kitco News that she has taken profits on half of her position. She said that she sees potential for silver reaching $150 an ounce.
On the downside, she is looking for support to hold at $85 an ounce.
Vecchio said that because of silver’s volatility, it is difficult to forecast the downside. However, he noted that he is watching the one-week moving average at $95 an ounce.
“From my view, as long as silver's holding 85 by the end of January, we still have a pretty stable uptrend in place,” he said.
