Silver (XAG/USD): A major top or a correction before new highs?

[Ben Graham]

Key takeaways

Silver’s 2025 surge was exceptional but stretched: XAG/USD gained 159% in 2025, driven by safe-haven flows and strong industrial demand, yet the late-December sell-off and extreme positioning have raised near-term bubble concerns.

No major secular top yet, but a medium-term peak likely in place: The Silver/Gold ratio and distance from the 200-day MA are elevated but still below historical levels that preceded long-term collapses, suggesting the rally is not structurally exhausted.

High odds of a multi-week correction before new highs: Elliott Wave and momentum signals point to the completion of a medium-term wave III, implying a corrective wave IV toward key supports before a potential final bullish wave V unfolds.

2025 was a banner year for both precious and industrial metals, where gold and silver doubled/quadrupled their typical moves, while copper hit multi-year highs on a mix of supply shocks and Chinese demand expectations.

Silver emerged as the top performer among the major cross-assets in 2025, with an annual gain of 159%, its best performance since the inflationary crisis period of 1979, according to data from the London Bullion Market Association (LBMA) (see Fig. 1).

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Fig. 1: Annual performances of cross assets as of 31 Dec 2025 (Source: MacroMicro)

Silver’s powerful rally has been underpinned by its dual appeal as both a safe-haven asset and a critical industrial metal, with robust demand from fast-growing sectors such as solar energy, electronics, and data centres.

After it hit a fresh all-time intraday high of US$84.03 on 29 December 2025, silver (XAG/USD) tumbled by 9% to end the session lower on the same day, where it also recorded its worst daily performance since August 2020.

The frenetic price action seen in the final two weeks of December 2025 has once again reignited fears of a speculative bubble bursting in silver (XAG/USD), drawing comparisons with the sharp bearish reversals witnessed in 2011 and 1980.

Let’s break down the details from a technical analysis standpoint.

Silver/Gold ratio suggests silver has reached a potential major topping process

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Fig. 2: Long-term secular trend of Silver with Silver/Gold ratio & % away from 200-day MA as of 2 Jan 2026 (Source: TradingView)

The current value of the Silver/Gold ratio on the 12-month chart stands at 0.017, which is still below a historically significant level of 0.0206, where it triggered off a major corrective decline of silver (-66%) and (-55%) during the 1982 to 1992 and 2010 to 2015 periods (see Fig. 2).

Although silver is currently trading about 75% above its 200-day moving average, a multi-decade extreme, it remains well below the 115% to 131% stretch reached during the high-inflation episodes of 1967 and 1979, which preceded a severe, 13-year collapse in prices till 1992.

Therefore, these observations suggest that silver has not reached a major top yet.

Elliot Wave/Fibonacci analysis suggests the end of a medium-term uptrend

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Fig. 3: Silver (XAG/USD) major trend of 2 Jan 2026 (Source: TradingView)

Based on Elliot Wave/Fibonacci analysis, the price action structure of silver (XAG/USD) is likely to have completed its medium-term bullish impulsive up move sequence from the week of 29 August 2022 low of US$17.56 after it met a Fibonacci extension price target of US$83.47 (labelled as a bullish wave III) on 29 December 2025 (printed an all-time intraday high of US$84.03) (see Fig. 3).

In addition, the weekly RSI momentum indicator has hit an extreme overbought level of 85/88 but has not flashed out any bearish divergence condition.

These observations suggest that silver (XAG/USD) has not completed a major bullish five-wave cycle, labelled as I, II, III, IV, V according to Elliot Wave.

Hence, the all-time high of US$84.03 printed on 29 December 2025 marks the potential termination of a medium-term bullish wave III (end of a medium-term uptrend), where the next probable move is a potential multi-week (at least) corrective decline sequence to kickstart a corrective wave IV before bullish wave V materializes with key long-term pivotal support at US$54.48 to maintain the major bullish structure.

Multi-week correction in process below US$84.03 key medium-term resistance

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Fig. 4: Silver (XAG/USD) medium-term trend of 2 Jan 2026 (Source: TradingView)

The price actions of silver (XAG/USD) as seen from its daily chart suggest the risk of a multi-week mean reversion/corrective decline sequence towards the 20-day and 50-day moving averages.

In addition, the daily Stochastic oscillator has exited from its overbought region (above 80) and still has ample room before it reaches its oversold region (below 20).

Watch the US$84.03 key medium-term pivotal resistance with the next medium-term supports coming in at US$67.16 and US$62.75/61.91 (also the 38.2% Fibonacci retracement of the medium-term uptrend from 7 April 2025 low to 29 December 2025 high and the pull-back support of the former resistance of the ascending channel) (see Fig. 4).

On the other hand, clearance and a daily close above the US$84.03 key medium-term resistance invalidates the bearish scenario for the continuation of the bullish impulsive up move sequence to expose the next medium-term resistances at US$87.90/90.90 and US$97.89.

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