Silver price prediction: Analyst explains why chasing rally may be risky

Roughly $6 billion of silver futures are set to be sold amid index rebalancing. Mirae Asset Sharekhan analyst suggests if Silver prices hold the support of $70, investors may consider buying the dip.

Silver seen volatile and choppy in very short term

Silver price performance

>> Silver is facing Index rebalancing led sell-off as nearly $7 billion worth of silver will be sold by the passive funds to rebalance their portfolios in five sessions starting January 8. 

>> Silver rose to $82.75 on January 7 but closed lower ahead of the Index rebalancing exercise. 

>> The grey metal extended its decline to the second straight day on January 8 as it swung violently between $73.85 and $79.02.

  >> At the time of writing this article, silver was changing hands at $76.10, down 2.7 per cent for the day, while the MCX March silver contract at Rs 244,520 was down 2.43 per cent. 

Data roundup:

US ISM services (December) data released on January 7 came in at 54.40 versus the forecast of 52.20 as the services sector expanded for the third straight monthly expansion, growing at the fastest pace since September 2024. New orders, matching the November pace, rose at the quickest pace since September 2024, as the employment also rose. ADP data, precursor of the nonfarm payroll report, showed that US employers added 41,000 jobs in December, lower than the median estimate of 50,000 jobs. Job Openings and Labor Turnover Survey (JOLTs) job openings slumped from 7,670,000 jobs in November to 7,146,000 jobs in December, though quits rate increasing from 1.8 per cent to 2 per cent gives the impression that job mobility improved.

 

Weekly US job data released on January 8 were largely mixed as jobless claims at 208, 000 jobs were better than the forecast of 212,000, but continuing claims rose from 1,858,000 to 1,914,000. US Trade balance in October was noted at -$29.49 billion, the narrowest trade deficit since June 2009 as imports, especially pharmaceuticals imports, dropped due to front loading in September in anticipation of 100 per cent tariff on pharmaceuticals starting October 1. The trade data will boost the US GDP growth in Q4 despite the Government shutdown.  

Dollar Index and yields

 

>> The US Dollar Index drew support from the US data to push higher for the third consecutive day. The Index rose 0.25 per cent to 98.92.

 

>> Two-year and ten-year US yields rose by 1 bps and 2 bps respectively. 

Index rebalancing:

>> In near-term, there is a risk that five-day rebalancing of commodities Index may pressurise the precious metals. Index rebalancing managed by Bloomberg and S&P Global will begin on January 8, wherein passive funds will likely sell outperforming assets and buy underperforming commodities to match the new weights assigned by both the Bloomberg Commodity Index and the S&P GSCI. 

>> Bloomberg estimates that around $120 billion is pegged to each Index, based on cash flowing from pension funds, and broader investment portfolios. 

>> Roughly $6 billion of silver futures are set to be sold as silver weightage has been reduced from 8.19 per cent in 2025 to 3.94 per cent in 2026 in Bloomberg Commodity Index, while Goldman Sachs Commodities Index will reduce silver weight from 1.23 per cent to 0.65 per cent.

 

Silver lease rate

>> One-month silver lease rate has eased to 4.46 per cent from 7+ per cent seen until recently, though the lease rate is still quite higher than historical lease rates of 0.3-0.5 per cent.

 

Silver ETF and COMEX inventory

>> As of January 7, 2026, total known global silver ETF holdings stood at 849.99 MOz, down by 2.40 per cent from the cycle high of 871 MOz seen on December 23, which is a bearish development per se, though the ETF level is still around the highest level since June 2022.

  >> ETFs have seen a net outflow of around 1.5 per cent YTD on profit booking and some tentative selling. 

>> Eligible COMEX silver inventory at 318.85 MOz is down by 6.85 per cent from the record peak of 342 MOz reached on October 3, 2025.

COMEX silver delivery

On January 1624 units of were delivered from COMEX warehouses, highest since December 30.

Perth Mint December silver sales

Sales in December fell to 597,873 Oz from 875,487 Oz in November.

Geopolitics watch

>> The US Administration ousting the Venezuelan leader Maduro has led to heightened geopolitical tensions. As the US President Trump opines that military option is possible in case of Greenland, a region which suits the US security needs strategically, the implications of such a possibility have thrown European leadership into a disarray as the US-led security system characterized by the North Atlantic Treaty Organization (NATO) Umbrella faces an upheaval.

 

>> European leaders have drawn a line over the Greenland issue as Denmark has told Trump to stop threatening Greenland.

A US intervention in Greenland would have huge repercussions for global power balance, which may destabilize the entire Western Alliance.

 

>> Trump, on January 8, said that Venezuela oversight may last many years. 

 

>> Reuters has reported that the U.S. Senate voted 52 to 47 to advance a resolution on January 8 to bar President Donald Trump from taking further military action against Venezuela without congressional authorization. Though procedural at this stage and not yet law, the resolution sets up a full Senate vote, requires House approval, and awaits the President’s signature. Even if it ultimately fails, it influences the President’s strategic calculations—acting as a political check that might discourage further unilateral interventions.

Upcoming data

>> Major focus will be on the US nonfarm payroll (December) and CPI data to be released on January 9 and January 13 respectively. In addition, University of Michigan Sentiment and inflation expectations (January 9), PPI (January 14) and retail sales (January 14) will also entertain traders.

 

>> Traders will also parse the Fed officials' speeches for clues to the Fed's monetary policy decision due on January 28.

 

Silver price outlook

 

>> China's silver frenzy has emerged as the most influential factor in pushing the silver prices higher as international silver prices chase Chinese prices higher. 

>> China's silver export restrictions and geopolitical tensions will continue to lend support to the metal. 

>> In very short-term, silver price is expected to be highly volatile and choppy due to crosscurrents of conflicting factors. 

>> If support at $70 holds, dip buying could be initiated. Chasing the rally could be risky. Silver price support is seen at $73.36/$70, and resistance at $78.68/$80.71/$82.        =================

Disclaimer: Praveen Singh,  head currencies and commodities at Mirae Asset Sharekhan. Views expressed are his own.