Silver’s Buying Frenzy Has Faded, But Its Outlook Remains Strong, Says TD Cowen

Silver (SLV) prices have fallen sharply, dropping about 40% from last week’s record high, which suggests that the recent market squeeze has ended. Indeed, Bart Melek, global head of commodity strategy at TD Cowen, told CNBC that the intense pressure that drove silver’s parabolic move has faded. Despite the pullback, Melek said that silver’s long-term outlook remains strong. He expects an average price of around $65 this year, well above production costs, supported by supply deficits of roughly 80 million ounces that could last for several years.

The earlier surge, he noted, was driven mainly by retail investors piling into call options on silver ETFs. That activity forced market makers to buy physical silver to hedge their positions, creating powerful gamma squeezes. Since then, conditions have normalized, with metal that had been stockpiled in North America due to tariff fears flowing back into the market and activity at the London Bullion Market Association easing back to normal levels.

Melek also discussed the broader precious metals market and said that gold’s (GLD) recent correction fits into a wider macro shift. He pointed to concerns around Kevin Warsh, who is viewed as more hawkish on inflation, as a catalyst for the selloff. Still, with U.S. debt near $38 trillion and central banks continuing to buy, Melek believes that the long-term case for precious metals remains intact. While he did not expect silver to approach $120 or gold to near $5,585 so quickly, he said that renewed investor interest later in the year could allow silver to test its recent highs again.

Is Silver a Good Buy?

Using TipRanks’ technical analysis tool, the indicators seem to point to a neutral outlook for silver. Indeed, the summary section pictured below shows that 10 indicators are Bullish, compared to four Neutral and eight Bearish indicators.

See more silver technical analysis