After an unprecedented historic surge, the silver market is now facing a prolonged consolidation period. Senior commodity strategists point out that the technical outlook for silver remains challenging, and in the short term, prices could even retreat to around $50 per ounce to find substantial support. Currently, spot silver is trading at approximately $59.11 per ounce, down nearly 2% on the day.

Analysts believe that the extreme rally, which pushed silver prices to a record high of over $120 per ounce earlier this year, is typically followed by a lengthy correction. Historically, the last time silver prices and volatility expanded so dramatically was between 1979 and 1980. Prices approached $50 per ounce before undergoing a prolonged decline, not reaching that level again until last year. Therefore, the market expects the consolidation phase for silver to last for several years, with prices most likely trading in a range of $50 to $84 per ounce, and the area around $50 serving as the first key support level.

The recent extreme volatility in the silver market also highlights extreme market sentiment. Data shows that the 260-day volatility of silver has currently reached 5.1 times that of the S&P 500 index, hitting its highest relative level since 1980. From the perspective of mean reversion, the 10-year mean reversion price for silver is approximately $31 per ounce. Looking at the two major rallies in 1980 and 2011, silver only truly bottomed out after falling to $3.60 in 1993 and $11.60 in 2020, respectively. Currently, silver trades at a premium of about 2.7 times its 10-year average, marking the highest premium since 1979.

Before market sentiment significantly improves, silver prices need to cross and hold above the key threshold of $84 per ounce to regain upward momentum. In addition to silver, the entire precious metals sector is also facing cooling pressures. Strategists expect gold prices to face similar downside risks, coming under significant pressure before the end of the year and potentially breaking below the $4,000 per ounce support level. This expectation is primarily driven by the rise in the U.S. 5-year Treasury yield to a 20-year high, while expectations of an oil price rebound in 2026 have also exacerbated the bearish pressure on the precious metals market to some extent.