Eseandre Mordi
After weeks of explosive gains, silver finally took a breather on Friday with roughly a 6% decline - wiping out just two days' worth of its impressive run. Yet even with this correction, the metal stays comfortably above the $50 mark, locked within a powerful uptrend that's dominated recent price action.
Silver Eases After Explosive Rally
Commodity strategist Ole S Hansen points out that this pullback follows a remarkable 40% surge since the late-August breakout, which drove prices to a multi-year high of $54.47. The XAUXAG ratio, measuring gold's price against silver, bounced back from 78 to 82 during the correction, highlighting silver's characteristically higher volatility compared to its yellow-metal cousin.
The current pause appears more like a natural exhale after an extended sprint rather than a fundamental shift in direction. Silver's tendency to amplify gold's moves - roughly nine times less liquid according to Hansen - means that sudden swings are part of the territory, especially when speculative interest runs hot.
Technical View: Support at $49.4 in Focus
The chart reveals silver's acceleration through September and into October, with prices maintaining a comfortable cushion above both the 50-day and 200-day moving averages. These trend indicators continue pointing upward, reinforcing the bullish structure.
Key technical levels to watch:
- $49.47 — 38.2% Fibonacci support (current test zone)
- $47.79 — 50% retracement level
- $46.22 — 61.8% deeper support
- $46.00 — critical threshold for trend integrity
The crucial level remains at $46. Holding above this mark would preserve the broader uptrend and suggest the pullback is merely a consolidation within an ongoing bull phase.
Market Drivers and Section 232 Uncertainty
Eyes are now turning toward Washington and the pending Section 232 decision, which could significantly impact industrial metals supply chains. Looser restrictions might ease pressure on London silver markets, while stricter measures could trigger another supply squeeze. Hansen's observation about silver's liquidity disadvantage compared to gold remains key to understanding these volatile swings. When money flows in or out of precious metals, silver tends to experience magnified reactions simply due to its thinner trading volumes and smaller market size.
Eseandre Mordi
