Silver prices are approaching key resistance levels during Wednesday's U.S. trading session as traders determine whether the recent rally is driven by actual demand or by momentum from gold's record-breaking rally. After hitting $49.81, silver is poised to hit the key psychological level of $50.00, a level that hasn't been tested in over a decade.

Silver's gains are partly due to gold's parabolic climb, which hit a record high of $4,049.70 this week. Gold bulls are now eyeing $4,100, while silver is testing whether it can break through on its own, fueled by expectations of industrial demand driven by expanding solar and electric vehicle infrastructure.



Gold's safe-haven premium continues to rise

Political uncertainty is currently lingering in the United States, Europe, and Japan, and safe-haven demand is providing solid support for gold's rally. The U.S. government shutdown has driven down Treasury yields, with the 10-year bond yield dropping to 4.104% and the 30-year bond yield to 4.695%. This factor is driving active buying of gold, even as the U.S. dollar index climbed to 98.56.

Despite a strengthening dollar and some hawkish rhetoric from the Federal Reserve, gold has remained resilient. Futures markets indicate a 92% probability of a 25 basis point rate cut at the next Federal Open Market Committee (FOMC) meeting, with cumulative rate cuts expected to reach nearly 110 basis points by the end of 2026. With delayed economic data creating an uncertain market outlook, traders are turning to gold as a hedge against policy uncertainty, driving up silver prices in the process.

Is there a risk of overheating as silver approaches $50?


(Source of spot silver daily chart: Yihuitong)

From a technical perspective, silver's rally appears overheated. The widening gap between the current price and the 50-day moving average of $41.32 suggests overbought conditions. Minor support lies at $47.33 and $45.81, while deeper support lies at $41.32. A break below these levels could trigger a larger correction.

Despite this, the significance of the $50.00 mark cannot be ignored. Given the limited resistance above this level, a clear breakout could open up the market for a new leg higher. However, a failure to sustain gains within this range could also trigger significant profit-taking.

Can demand fundamentals continue to support silver?

Unlike gold, silver's bull run isn't driven solely by safe-haven flows. Traders are closely watching expectations of strong industrial consumption—particularly from clean energy—as a more sustainable driver. If actual consumption matches this demand outlook, silver could decouple from gold and maintain higher levels even if gold's rally stalls.

Prediction: Bullish around $50 but cautious

Bulls are still driving the market's momentum, but signs of overheating are emerging. A clear breakout and sustained resistance above $50.00 would likely trigger a new wave of buying. Failure to hold this level could trigger a pullback to $47.33 or even $45.81. Fluctuations are expected around the $50 mark, and the market needs to determine whether silver is following gold's lead or leading the rally.