By: Economy Middle east

Silver prices reached unprecedented levels above $66 per troy ounce on Wednesday, driven by disappointing U.S. economic indicators that heightened recession fears and boosted safe-haven demand. The metal’s rally marks a continuation of its explosive 2025 performance, with year-to-date gains exceeding 124 percent.

Weak U.S. data fuels rally

Fresh U.S. economic reports released on December 16 painted a concerning picture, propelling silver to all-time highs during Asian trading hours. The Nonfarm Payrolls (NFP) for November added just 64,000 jobs, surpassing estimates of 50,000 but following a downwardly revised 105,000 loss in October; unemployment climbed to 4.6 percent, the highest since September 2021. Retail Sales stagnated month-on-month in October, missing expectations of 0.1 percent growth, while flash S&P Global PMI dropped sharply to 53.0 from 54.2 in November.

These figures amplified investor anxiety over a U.S. slowdown, prompting a flight to precious metals. Silver, often viewed as a hybrid safe-haven and industrial asset, benefited more than gold due to its sensitivity to economic cycles. TradingEconomics confirmed silver at 65.84 USD/t. oz on December 17, up 0.68 percent daily and 29.87 percent monthly, with a historical peak of 66 hit this month.

Technical strength supports bullish momentum

From a technical standpoint, silver traded around $66 during early Asian sessions, up nearly 3 percent and holding above the rising 20-period Exponential Moving Average (EMA) at $63.28. The 14-period Relative Strength Index (RSI) hovered at 69.16, approaching overbought territory but signaling sustained upside potential.

Analysts note that as long as prices remain above the EMA, pullbacks will find support, targeting $70 next; a break below could test $60. Prior consolidation near $63-64 respected an uptrend channel from late November, with dip-buying evident ahead of NFP. LongForecast pegged spot prices at $65.57 on December 16, with a 3.55 percent daily gain from $63.32.

Broader market drivers and Fed expectations

Anticipation of aggressive Federal Reserve rate cuts underpins silver’s outlook. The CME FedWatch Tool shows a 67.6 percent probability of at least two cuts in 2026, exceeding the Fed’s December projection of one. Lower rates weaken the yield on cash holdings, favoring non-yielding assets like silver amid subdued real yields.

Industrial demand remains robust, particularly in solar panels and electronics, where silver’s superior conductivity drives usage. China and India’s economic dynamics—key consumers for industry and jewelry—further support prices, though U.S. slowdown risks temper optimism. Gold-silver ratio dynamics suggest silver’s relative undervaluation, encouraging portfolio diversification.

Industrial and investment demand dynamics

Silver’s dual role amplifies its volatility compared to gold. While safe-haven flows dominate amid geopolitical tensions and recession signals, industrial applications account for over half of demand. Sectors like renewables and tech, resilient despite U.S. softness, provide a floor; solar alone could drive deficits if growth persists.

Investor positioning via ETFs and futures has surged, with COMEX data reflecting net long bets at multi-year highs. Recycling rates and mining supply—silver being more abundant than gold—offer counterbalances, but current momentum favors bulls. Ukraine peace talks briefly pressured prices on December 16, with spot dipping to $63.64 before rebounding.

Future outlook and risks

Looking ahead, silver’s path hinges on upcoming data like ISM Manufacturing PMI and Fed rhetoric. A softer U.S. economy without collapse could sustain the rally, as lower rates and dollar weakness propel XAG/USD. Forecasts vary, but technicals point to $70 if $66 holds, with overbought RSI hinting at near-term consolidation.

Risks include profit-taking, a stronger dollar on hawkish Fed surprises, or industrial slowdowns in China. Nonetheless, 2025’s 124 percent surge positions silver as a standout commodity, outpacing many assets amid global uncertainty. Traders eye psychological $66 as a launchpad for triple-digit potential in 2026.