Is the future trend of silver facing a turning point? Supply shortages and selling pressure coexist

Under the dual support of the Federal Reserve’s rate cut expectations and supply shortages, silver prices are showing strong momentum by the end of 2024. According to the latest market data, silver has surpassed the $65/ounce mark, setting a new historical record. Gold’s performance has been relatively moderate, currently quoted at $4322/ounce, with room for further upward movement from its high point.

Economic Fundamentals Shift to Signal Support

Changes in the U.S. labor market have become a key factor driving precious metal gains. In October, non-farm employment unexpectedly fell sharply by 105,000 jobs. Although there was a rebound in November to 64,000 jobs, the unemployment rate rose against the trend to 4.6%, hitting a four-year high. This seemingly contradictory data reflects structural weakness in the labor market.

Market participants have begun to react to the Fed’s policy shift. Traders generally expect the U.S. Federal Reserve to implement two rate cuts next year. The start of a rate-cutting cycle typically benefits commodity assets represented by silver, as it reduces the opportunity cost of holding interest-free assets.

Supply Gap Becomes the Core Driving Force

From the supply side, the tight situation in silver is becoming increasingly prominent. Michele Schneider, Chief Market Strategist at MarketGauge, pointed out that global silver supply has fallen into a severe shortage, while industrial demand continues to grow. She remains bullish on silver’s outlook, believing that “supply-side bottlenecks pose significant challenges, and the expanding demand trend will not be matched by sufficient supply in the future.”

This supply-demand imbalance is directly reflected in the gold-silver ratio trend. The ratio has now fallen below 66, reaching its lowest point since 2021. According to Michele Schneider’s analysis, the gold-silver ratio could further decline to around 40, implying considerable upside potential for silver relative to gold.

Experts Forecast Technical Risks

In an optimistic scenario, Michele Schneider predicts that silver could break through $75/ounce by 2026. She also emphasizes that any phase of consolidation or pullback should be viewed as a buying opportunity. This perspective reflects institutional investors’ confidence in silver’s future trajectory.

However, JPMorgan recently issued a warning signal, drawing market attention. The investment bank pointed out that the Bloomberg Commodity Index (BCOM) will undergo its annual rebalancing in January 2026. This routine technical adjustment could trigger a significant sell-off in the futures market, with silver futures facing the heaviest selling pressure.

In the short term, silver prices will face a tug-of-war between supply support and technical selling pressure. Investors need to closely monitor the Fed’s policy moves and the schedule of commodity index adjustments.