Spot silver $Silver - main 2407(SImain)$ prices surged above $30 an ounce this week to their highest level in more than a decade. The precious metal closed up 6.5% at $31.49 an ounce on Friday, its highest level since February 2013.
So far this year, silver has surged 32%, outpacing gold and making it one of the best performing major commodities.
The rise in silver prices is driven by a combination of investor sentiment, signs of improving industrial demand, and an expected fourth year of silver supply shortages.
Phil Streible, chief market strategist at Blue Line Futures, said,
The renewed frenzy of meme stock chasing this week also contributed to silver's rebound. Silver is usually a favorite area for these speculators.
In fact, in 2021, silver briefly became a target market for $Reddit(RDDT)$ retail traders amid the attention-grabbing meme stock rush for $GameStop(GME)$ and other small-cap stocks.
Daniel Ghali, senior commodity strategist at TD Securities, said:
A breakout of the precious metal above the $30 mark could trigger heavy buying activity from exchange-traded funds, which could increase the risk of a silver squeeze, especially with the renewed meme stock craze that has previously permeated the silver market.
Year-to-date, investors remain net sellers of physically backed silver ETFs. According to the U.S. Commodity Futures Trading Commission (CFTC), money fund managers remained net bullish on Comex silver futures as of May 7, holding total short interest of 12.5% of total open interest.
This is despite the fact that silver has outperformed gold this year as one of the major commodities with the best returns. Still, compared with gold, which is near record highs, silver is still cheap.
Alex Kuptsikevich, senior market analyst at FxPro, pointed out:
The silver market does not look overheated, and the technical chart is only now entering the overbought territory of the daily RSI. Last month, after the RSI moved above 70, silver was actively overweight for another three weeks. Technically, that clears the way for a rally.
The near-term target for silver is $33 an ounce; Still, the precious metal could make a push toward its all-time high of $50.
Michele Schneider, director of trading training and research at MarketGauge, said,
The silver's value play makes it more attractive than gold. The $30 level is an important resistance level for silver, and if silver can hold $29 and effectively break above $30, the resistance to eventually reaching $35 and $40 is actually a lot smaller.
Julia Khandoshko, CEO of European broker Mind Money, said she believes this move in silver reflects broader bullish momentum in the commodities market. Silver's rebound comes as copper prices have risen to record highs above $5 a pound.
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