Silver remains under pressure as sell-off continues

SILVER has experienced a dramatic boom-and-reset cycle over the past 18 months. After starting 2025 below US$29 an ounce, the metal surged on tightening inventories, persistent supply deficits and strong investment demand, reaching about US$84 an ounce by December 2025 before peaking at a record high above US$121 an ounce in January 2026. Since then, sentiment has reversed sharply, with silver retreating to around US$61 an ounce, roughly 50 per cent below its peak and its lowest level in six months, despite remaining significantly higher than a year ago.

While the longer-term outlook remains underpinned by a projected sixth consecutive year of market deficits, short-term fundamentals have become increasingly challenging. Elevated prices are beginning to impair demand across several key consumption segments. Industrial demand growth is slowing, photovoltaic silver (finely milled silver paste) demand is facing pressure from thrifting and substitution efforts, and jewellery and silverware purchases have weakened considerably, particularly in price-sensitive markets such as India. As a result, silver continues to trade with a scarcity premium that appears difficult to justify solely on near-term demand conditions.

From a technical perspective, silver remains entrenched in a broader downtrend following its record high in January. The chart continues to display a clear sequence of lower highs and lower lows, while prices remain below the 50-day, 100-day and 200-day moving averages, reinforcing the bearish near-term outlook.

Adding to the weakness, the sharp sell-off from the US$70 level in recent weeks has established a significant resistance zone between US$65 and US$70. This area previously served as support before being decisively broken and has now transitioned into a resistance level.

A rebound into this zone is likely to encounter renewed selling pressure from market participants seeking to exit positions or initiate fresh short positions. Unless silver can reclaim and sustain trading above this resistance band, the prevailing technical structure suggests that downside risks remain dominant, with a retest of the psychologically important US$50 level a plausible scenario.

While structural supply deficits continue to fuel silver’s long-term investment appeal, weakening physical demand and a less supportive macroeconomic environment are weighing on prices in the near term. From a technical standpoint, the metal remains constrained below key resistance levels, with the prevailing downtrend and bearish price structure signalling further downside risks. Collectively, these factors suggest silver may remain vulnerable to additional corrective pressure as the market continues to unwind the excesses of its remarkable rally over the past 18 months.

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The writer is a dealer at Phillip Nova