During Asian and European trading on Tuesday, silver retreated from its record high, with key technical indicators showing that the six-day rally had pushed prices into overbought territory. However, before the U.S. session, silver clawed back all its intraday losses and surged back above the $58 level.

The head of commodity strategy at Saxo Bank noted that this move has helped improve risk sentiment, stabilizing the market and triggering some profit-taking. Silver is undergoing a natural correction, but as long as prices hold the $54.5–$55 per ounce area, the broader uptrend remains intact.

On expectations that silver supply will remain tight, the metal has gained more than 8% over the last two trading days. Since a record volume of metal flowed into London in October to relieve a historic short squeeze, other trading hubs have also come under pressure.

TD Securities pointed out that silver’s recent price action has gone beyond what would normally be justified by rational momentum. Expectations for all demand categories are declining, making investment demand the primary driver at this stage. The bank cited weak physical activity in London’s over-the-counter market as evidence.

The gold–silver ratio has dropped to its lowest level in over a year, another signal that silver may have run too far too fast. Investors sometimes view such extremes as potential turning points.

Gold is also expected to be supported by rising expectations that the Federal Reserve will cut rates again next week. Markets have now almost fully priced in a 25-basis-point rate cut at the Fed’s final meeting of the year.

While gold’s performance appears relatively subdued, the underlying fundamentals have not changed. Market expectations for Fed rate cuts remain in place, and from a yield perspective this should be supportive for both gold and silver as non-yielding assets.

Market Analysis:

On the weekly chart, spot silver continues to trend higher, with the MACD lines and histogram expanding further above the zero line. Investors have been betting on persistent tightness in silver supply and another upcoming Fed rate cut, both of which are positive for non-yielding precious metals. However, the Relative Strength Index (RSI) suggests that recent speculative activity has pushed upside momentum into overheated territory.