Silver has been consolidating near $66 after a strong August rally, with XAG/USD trading around $65.8–$66 and struggling for direction after briefly dipping below $65 last week. Analyst Karel Mercx highlights what he calls “one of the strongest silver signals,” based on an increasingly negative spread between 12-month silver swap rates and broader interest rates.
That spread fell from roughly -1.3 percentage points in early August to around -2 percentage points in early September, reaching approximately -2.06 on September 1 and remaining near -1.99 on the latest chart. Mercx interprets the move as evidence of unusually tight conditions in the physical silver lending market: fewer holders are willing to lend metal for a year, and those who do are demanding considerably more compensation. While the signal does not guarantee an immediate rally, it suggests something bullish may be developing beneath silver’s quiet surface, especially alongside structural supply constraints and strong industrial demand from electrification.
Technical analyst Fthegurus views silver’s recent pullback as a healthy test after August gained roughly 15%–17%. Silver climbed as high as about $71.19 on August 28, then reversed toward the $65.03 area. It briefly traded below $65, reaching about $64.75, but buyers quickly pushed it back above $66, creating what Fthegurus calls a “fake breakdown.” The chart projects a possible continuation of September consolidation and another test of $65, followed by a gradual recovery toward $70 and eventually above it.
Key levels are now clearly defined: support sits near $65, while the next major resistance is around $70.87. A move through $68 would be an encouraging first step, while a breakout above roughly $71 could open the door toward the mid-$70s. If silver decisively loses $65 on a closing basis, the bullish interpretation weakens, with downside areas around $63 and $61. For now, the base case remains constructive as long as $65 holds.
