Silver’s rally continues to power higher as talk remains about a supply imbalance.
XAGUSD – Weekly Chart
The price of XAGUSD continues to rise, and a lack of sellers suggests that the uptrend can persist without any change in sentiment. That looks unlikely as we move into year-end, and January will determine where institutional investors stand.
Silver prices have shocked investors in recent weeks, supported by a widening supply-demand imbalance. Higher investor demand has exacerbated a supply-constrained environment, and talk of current highs could further exacerbate the situation.
The talk of booming gold prices led to long queues at bullion dealers worldwide, and the same could happen with silver.
Analyst Anuj Gupta said, “Silver is currently running in a demand deficit. Demand is rising, but supply is constrained. Over the past 10 years, supply has declined while demand has increased by 15–20 per cent, mainly driven by industrial activity.
This year, both gold and silver have returned their best annual performance since 1979, with silver outperforming gold. This looks to have shifted some investor interest toward silver as it provides the same safe-haven potential as gold over a shorter timeframe. Silver has seen its investment status improve, as EVs and solar are among the industries driving demand for the precious metal.
The Federal Reserve has boosted the outlook for metals after it signalled further rate cuts. But global data from China, the U.S., and other countries hint at potential recessionary pressures ahead.
The gold-to-silver ratio has been another factor in the recent surge in silver prices. Gold has been rising consistently since 2022, and by January 2025, the gold-to-silver ratio exceeded 100, well above the long-term average of 70.
That made silver look underpriced,d and investors moved into the asset, pushing up demand and driving the ratio back under 65 as of December 22.
Silver is on a strong path into year-end, and it remains to be seen if central banks will take action to take some of the heat out of the precious metals market in 2026. China’s gold purchases have continued, which will put a floor under gold in the near term.
