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Silver eyes $50? TD Securities predicts major breakout after $31 support holds

The silver market is holding initial support over $31 an ounce, and according to one major bank, the precious metal has room to move higher as momentum picks up.

In a note published Tuesday, commodity analysts at TD Securities reiterated their bullish outlook for silver as physical demand continues to outstrip supply. In his latest note, Daniel Ghali, senior commodity strategist at the Canadian Bank, said he is keeping an eye on the white metal’s all-time highs.

“The last time silver prices broke through $30/oz, it traded to $50/oz in less than ten weeks,” Ghali wrote.

Ghali said that renewed investor demand, which ignited last week’s breakout rally, will add to the precious metal’s growing deficit, providing long-term support for the asset.

“There is a notable risk of some ‘reflexivity’ in this thesis, as the break north of $30/oz could plausibly catalyze a substantial amount of ETF buying activity which could further erode ‘free-floating’ inventories on the LBMA. After all, the last viral #silversqueeze meme catalyzed approximately 110m oz of silver demand in ETFs in a few days, which would represent a -35% erosion in the free float if repeated today.

TDS has been a long-term silver bull as industrial demand is expected to create another significant market deficit. In a report published last month, TDS said that growing demand could wipe out the metal’s significant above-ground stocks within 12 to 24 months.

Last month, in its annual World Silver Survey, the Silver Institute said that the precious metal is expected to see a supply deficit of 215.3 million ounces, the second-largest deficit in more than two decades.

Although silver has seen significant gains in recent days, some analysts have said that the market is just getting started as it plays catch up to gold.

Silver’s recent outperformance in the precious metals space has pushed the gold/silver ratio to 75 points, its lowest level since December 2022. July silver futures last traded at $32.26 an ounce, down 0.52% on the day; meanwhile, June gold futures last traded at $2,426.80, down 0.48% on the day.

Some analysts have said that silver is attracting new attention as investors look to hedge themselves against persistently elevated inflation.

Source: Neils Christensen Kitco