For much of last week, silver’s 14-day relative strength index whipsawed on either side of 70 — a threshold above which some traders are likely to deem the metal as overbought. It was at 70.9 on Monday.

“The current rally does appear frothy and retail investors are demonstrating some momentum-chasing behavior,” said Justin Lin, a Sydney-based investment analyst at Global X Management Co..

Silver has more than doubled in value this year – outshining gold’s 60% surge – and has gained momentum more recently from expectations the Fed will ease monetary policy at its last meeting of the year. Swaps traders have priced in a near-certain quarter-point reduction — a tailwind for precious metals, which don’t pay interest.

More broadly, the silver market is also dealing with the aftershocks of a historic short squeeze. One-month lease rates — which represent the annualized cost of borrowing metal in London – remain elevated at around 6%, even after a record amount of metal flowed into the world’s biggest silver-trading hub. These flows in turn have put other centers under pressure: Shanghai’s inventories are near their lowest in a decade.

What Bloomberg Strategists Say...

“Silver heads into the week with the potential for greater volatility as the market navigates the Fed’s policy decision and continued tightness in physical supply. A rate cut this week would preserve the conditions that have supported the metal’s outperformance, but stretched positioning leaves prices exposed to sharper swings.”

— Nour Al Ali, Markets Live strategist. For full analysis, click here.

There was some early-week profit-taking, but silver prices have found support in tightening inventories in London and China, said Manav Modi, an analyst at Mumbai-based Motilal Oswal Financial Services Ltd. “Strong industrial demand, sustained safe-haven flows, and the highest weekly ETF inflows since July further reinforced bullish momentum.”