Spot silver hit a historic high of $94.68 per ounce during Asian trading hours on Tuesday, January 20. Although it retreated nearly 2% to $92.57 due to profit-taking, it subsequently recovered most of those losses and is currently trading around $94.30. Analysts suggest that safe-haven demand may help limit silver's downside in the near term.
US President Donald Trump stated last Saturday that he would impose a 10% import tariff on goods from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland, and the United Kingdom, effective February 1. This measure will remain until the US is granted permission to purchase Greenland.
Reports indicate that French President Emmanuel Macron has called for the EU to activate its "nuclear option" in trade. This move could potentially block US access to the EU market or implement export controls, forming part of a broader list of potential countermeasures. Trump's threat of new tariffs against the eight European nations opposing his proposed acquisition of Greenland is likely to boost traditional safe-haven assets, thereby benefiting the silver price.
On another front, markets widely expect the Federal Reserve to keep interest rates unchanged at its January policy meeting. According to the CME's FedWatch Tool, the market has priced in a nearly 5% probability of a Fed rate cut later this month. The prevailing view is that the Fed can maintain rates at elevated levels for longer, which typically strengthens the US dollar and puts pressure on non-yielding assets like silver.
Silver confirmed a breakout above its three-day consolidation range of $86.30-$93.50 on Monday and reached a new high ($94.68) during early Asian trading on Tuesday. This indicates that bulls remain firmly in control, and the trend is expected to extend towards higher price levels.
Rising support levels reinforce the strength of the upward trend. Despite increasing risks of a parabolic surge culminating in a top, the current upward move remains constructive. Holding above key support levels will further confirm the underlying demand evident in the trend.
Given this week's breakout, last week's high of $80.31 is identified as a key lower support level based on structural analysis. In the short term, the rising 10-day Moving Average (MA) at $87.13 provides significant dynamic support, alongside the ascending trendline initiated in late November.
From a slightly broader timeframe, the 20-day MA at $80.65 serves as a critical support level. A breach of the 20-day MA would be the first signal required before indications of a more substantial potential correction can be considered.
The bullish flag pattern breakout signals a continuation of the trend. Note that since the recovery in late November, the 10-day MA has consistently acted as a clear dynamic support level, propelling prices higher with accelerating momentum. During the ascent, it has successfully been tested as support on multiple occasions, including the most recent one. Before last week's bullish pennant breakout, silver rebounded from support near the 10-day MA. That was the last time the price touched that level, as subsequent bullish momentum intensified. This rally is likely targeting the significant psychological barrier of $100, which is expected to pose key upside resistance.
Measurement targets highlight further upside potential. The bullish flag breakout provides a classic trend continuation signal, confirmed by new closing trend highs, marking the start of a new upward phase for the trend. To roughly estimate silver's potential trajectory, a measurement target is calculated by taking the distance from the November 28 breakout high of $54.44 to the pennant top at $84.13, then adding that distance to the pennant trigger point of $82.77.
In price terms, this value is approximately $112.32; calculated as a percentage change, the upside potential target is $127.63. The key takeaway is that based on this trend pattern, silver possesses significant upside potential. Regardless of whether these specific measurement targets are reached, they indicate sustained strong buyer demand.
Silver prices experienced a technical pullback after refreshing their historical peak, yet the overall structure of the bullish trend remains solid. Driven by a combination of risk-off sentiment and technical breakouts, the medium to long-term trend for silver continues to lean optimistic. However, caution is warranted in the short term regarding profit-taking pressure near all-time highs. Markets will closely monitor developments in Europe-US trade tensions and signals from Federal Reserve policy.
