Silver Price Forecast Summary

Author: James Hyerczyk

Published: January 4, 2026

Key Highlights

• Silver reached a record high of $84.03 before experiencing a significant reversal.
• The reversal was triggered by the Chicago Mercantile Exchange (CME) raising margins twice in one week.
• Current trading strategy is shifting from momentum to value due to increased trading costs.

Market Analysis

Spot silver (XAGUSD) closed at $72.82, down $6.49 or -8.18% for the week following a record high. The sharp decline formed a closing price reversal top, indicating potential further downside pressure. This pattern suggests that if the price breaks below $70.07, a bearish trend could confirm, targeting a correction to the $64.79-$60.25 retracement zone.

Strategic Shift: From Momentum to Value

Despite the bearish signals, the long-term outlook remains bullish due to strong fundamentals. The focus will now be on identifying value rather than chasing momentum. This means that buyers are expected to emerge on price dips into the value zone rather than simply taking out weak offers.

Reversal Pattern and Targets

The reversal pattern indicates that a trade below last week’s low at $70.07 will confirm the bearish outlook. The anticipated correction could last 2-3 weeks, with the first target being the 50% to 61.8% retracement zone at $64.79 to $60.25. If the market does not confirm this pattern, a potential "dead cat" bounce could occur, with resistance levels at $77.05 to $78.70.

Fundamental Factors

Despite the margin hikes, the fundamentals for silver remain strong, with record demand and a supply shortage. However, the increased cost of trading futures due to margin hikes may deter some traders. Historically, margin hikes have halted rallies, but the current rally is supported by solid fundamentals.

Conditions for Rally Resumption

For the silver rally to resume, volatility must decrease, which would occur if buyers stop aggressively chasing prices. Additionally, the fundamentals must remain stable, with ongoing supply shortages and strong demand for physical silver. The Federal Reserve's actions regarding interest rates will also play a crucial role in shaping market sentiment.

Upcoming Economic Indicators

The upcoming Non-Farm Payrolls report will provide insight into the Fed's potential rate-cutting path for 2026. A strong jobs report may pressure silver prices, while a weak report could support them.

Conclusion

In summary, while silver has experienced a significant pullback, the long-term outlook remains positive. Traders should watch key levels and economic indicators closely to navigate the evolving market landscape.