Silver is pushing to capture the 32.55 resistance as the persistent silver deficit, which has existed since 2021, continues. In 2024, market supply is expected to rise slightly more than demand due to high prices, but the silver deficit is projected to remain substantial enough to sustain positive price pressure into 2025. Despite weak global industrial growth, increasing demand for electronics across various industries is keeping silver demand elevated. The electrification and technological advancement of the automobile sector exemplify this trend. Additionally, the AI boom and surging demand for semiconductors are expected to have a significant impact on silver demand. 

(Gold/Silver Ratio) 

Despite favorable supply-demand dynamics, the recent silver rally has largely been driven by its correlation with gold. Rising demand for physical gold first emerged in Asia last year before gaining traction in the U.S., fueled by increasing risk and uncertainty since November. Meanwhile, COMEX inventories for both silver and gold have risen rapidly in recent weeks. 

The key indicator showing that gold is currently leading silver is the gold/silver ratio, which is now tilted in favor of gold at nearly 1.5 standard deviations above its historical average. Typically, when precious metal prices rise, silver benefits more due to its lower liquidity in financial markets relative to gold. Lower liquidity often results in sharper price movements, meaning silver usually leads during both rallies and sell-offs. 

This time, however, gold has reached new highs while silver has remained relatively muted. Silver is bound to catch up, and the ratio will likely decline toward its historical average near 83 in the coming weeks. 

(XAGUSD) 

Silver’s uptrend channel remains intact. During silver’s year-end retreat, the lower boundary of the trend channel was tested twice in December but successfully held. Combined with two additional tests in early 2024, the uptrend is clearly confirmed with both upper and lower bands. 

Currently, silver is trading near the middle of this channel, attempting to break through the 32.55 resistance level and the channel’s midpoint at 33.30, which has acted as both resistance and support over the past year. Fundamentally and technically, conditions slightly favor further upside. However, the immediate two key resistance levels could slow the upward movement. 

If a breakout occurs, silver may gain momentum and see sharp price increases. Until then, the 23.6% retracement level of the trend channel at 31.30 serves as the key support to watch.