Silver prices settle near a three-year high. A long bull market may be close behind.

By Myra P. Saefong

The metal's up over 9% for the week after gold's rise to a fresh record

Silver prices finished higher Thursday to notch a sixth consecutive session gain and their highest settlement in nearly 3 years.

On Comex, the most-active May silver contract (SI00) (SIK24) climbed 19 cents, or 0.7%, to settle at $27.25 an ounce, trading 9.4% higher week to date, according to Dow Jones Market Data. Prices settled at their highest since June 16, 2021.

The move in silver follows a rise in gold futures (GC00) (GCM24) to a fresh record high settlement of $2,315 an ounce on Wednesday. Based on the most-active contract, prices for the yellow metal trade more than 3% higher so far this week.

Both metals have been in demand, particularly gold, "essentially because of years of high inflation chipping away at the value of fiat currencies, which is the same reason why bitcoin has also been hitting record levels," Fawad Razaqzada, market analyst at StoneX Group's City Index and Forex.com, told MarketWatch.

Read: Veteran strategist says grab your hammer and pick - gold is headed to $3,000

"Up until a couple of weeks ago, silver wasn't finding much love," he said. "But stronger industrial data from China has boosted demand for industrial materials like copper and silver."

Forecasts from The Silver Institute show that global silver supplies are expected to mark a fourth straight year in deficit, with demand for the industrial and precious metal expected to reach its second-highest level on record this year.

Read: It may be silver's turn to shine after the gold rush to record high prices

This week, silver's rally has also been fueled by a "technical breakout above key resistance in the $25 area," said Razaqzada. That has drawn in "momentum traders who had been taking advantage of the other precious metal - gold - in recent weeks."

'Silver has a lot of catching up to do on the upside, and this week's technical breakout from a multi-year consolidation phase may well be the start of a long bull market.'Fawad Razaqzada, StoneX

Still, at these levels, "both metals appear a little overbought and a bit of a pullback should not come as surprise," he said. "That said, the big breakout in silver means traders will be happy to buy the dips moving forward."

Give all of that, Razaqzada said he expects to see more gains for silver this year, particularly because the metal has not even neared the highs of its most recent years around $30. In contrast gold has been hitting repeated all-time highs, he said.

Read: Oil, gold and the dollar are surging. Here's why that could derail the Fed's rate-cut outlook.

"Silver has a lot of catching up to do on the upside, and this week's technical breakout from a multi-year consolidation phase may well be the start of a long bull market," he said.

-Myra P. Saefong

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04-04-24 1350ET

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