Silver breaks multi-week high; AI demand thesis strengthens

Silver has staged a notable breakout, jumping to two-month highs and attracting both retail and technical traders who see a momentumThe empirical fact that winners keep winning over the medium term. trade taking shape. Ole Hansen, a widely-followed commodity analyst, has flagged USD 91.5 as a critical technical level to watch for confirmation of an extended rally. The move is partly driven by the broader precious metals complex reacting to Middle East supply shock and geopolitical risk premia, but traders are increasingly citing AI infrastructure demand as a secondary driver.

The thesis links silver to copper refining constraints. As noted, China's sulphuric acid export ban has disrupted copper and silver refining chains simultaneously, creating dual supply pressures. Additionally, silver is an input to solar panels and some semiconductor manufacturing processes, making it a proxy play on AI infrastructure capex. Traders are buying silver not as a traditional inflationThe rate at which prices rise across an economy. or currency hedge, but as a structural supply-constrained industrial metal benefiting from AI-driven capex cycles.

Technical traders have identified a momentumThe empirical fact that winners keep winning over the medium term. breakout. After breaking above a prior blue resistance line, the setup suggests momentum can carryIncome earned from holding a position over time. silver back to recent multi-month highs within four weeks. RSIRelative Strength Index - momentum oscillator on a 0-100 scale. and volume have improved, adding credibility to the breakout thesis. Bullish voices note that even with the US dollar failing to tank dramatically, silver is rallying, suggesting genuine industrial demand rather than pure currency speculation.

Risk factors are twofold. First, if the Iran conflict resolves and oil prices fall sharply, risk-off sentiment could reverse. Second, if copper demand cools (due to AI capex slowdown or economic data deteriorating), the industrial demand case for silver weakens. However, the technical setup is compelling enough that momentumThe empirical fact that winners keep winning over the medium term. traders are confident in at least a test of USD 96-98 before potential reversal.