Silver experiences one of the most volatile three-day periods going back to 1990.
Commodities, specifically precious metals, have taken the limelight over the past two trading days with notable upside during holiday shortened trading on Friday (12/26) and downside action during Monday’s (12/29) trading. While gold (GC/) fell over 4.5% during Monday’s trading after moving 1% higher on Friday, silver (SI/) witnessed roughly an 8.6% drop Monday after rallying more than 7.5% Friday. This marked the 17th best day all-time (best since March 2023) and 24th worst day all-time (worst since February 2021) for the commodity going back to 1990 for silver. Intriguingly enough, February 2021 was another time in which silver rallied notably one day before deteriorating quickly on the following day - action on 2/1/2021 saw silver rally over 9% before falling 10% on 2/2/2021.
Friday’s (12/26) price action brought silver from $71 to a new all-time high at $79 before Monday’s action led the point and figure chart back into a column of Os, negating Friday’s chart action. With the chart at highs following Friday’s trading, silver found itself above the top of the 10-week trading band and in extremely overbought territory with a Weekly OBOS north of 159%. This marked the seventh most overbought level for silver all-time going back to 1990 and highest since July and August 2020. Monday’s pullback brought the chart down from those recent high readings, but the commodity continues to remain above the top of the 10-week trading band. Intraday action Tuesday saw silver rallying above $78, leading to a reversal into Xs and a higher bottom on both the default trend (0.50 point per box) and longer-term 1-point per box chart (bear in mind, commodity charts do not update during the trading day). This marked the first time in silver's trading the commodity has rallied more than 5%, then fallen more than 5% before gaining 5% in a three-day period going back to 1990.
Among the number of catalysts for precious metals and silver in recent days is metal scarcity and ongoing geopolitical uncertainty. Profit taking also provides a lesser driver but shouldn’t be discounted considering the extended position and calendar after historically positive action in 2025. Broadly speaking though, the technical trending and relative strength picture for precious metals and silver continues to remain positive in the long-term. Perspective of this can be found by looking at the long-term 1 point per box chart, which has been on a buy signal and trading in a positive trend since April 2023. With an extended picture such as shown on the point and figure chart, a period of consolidation and normalization eventually follows. Following this potential consolidation phase, investors will monitor whether silver can sustain its long-term trend or if a breakdown follows, potentially threatening the long-term trend. Beyond current support in the lower $70s, support on the default point and figure chart can be found at $64, $61, and $56.50, just above the middle of the 10-week trading band. Support on the long-term 1 point per box chart can be found at $49 and $46.
