Silver (XAG/USD) is falling during the Asian session on Tuesday, reversing some of Monday’s gains. The price has dropped below the mid-$62.00 range, showing a loss of over 2.5% for the day, and has moved below the 100-hour Simple Moving Average support level. This negative trend suggests more selling could push XAG/USD down to the $62.00 level and possibly lower to the $61.45 support area. If bearish pressure persists, silver might test the $60.80 zone and approach the $60.00 psychological level.

Market Sentiment Shift

To change market sentiment, bulls need to push above the $64.00 mark. If they succeed, XAG/USD could target its recent high of around $64.65 and aim for the $65.00 level. Silver prices are influenced by factors like geopolitical tensions, interest rates, and the strength of the US Dollar. Additionally, industrial demand, particularly in electronics and solar energy, plays a significant role in its price. Silver often follows gold’s movements because both are seen as safe-haven assets. The Gold/Silver ratio can reveal the relative value of these metals; a high ratio may suggest that silver is undervalued or that gold is overvalued. The recent drop below the critical support at $62.50 indicates a possible bearish trend. Silver is pulling back from its record highs, and technical indicators suggest that this downward movement may continue. The outlook seems to favor those expecting further price declines in the coming weeks. This perspective is backed by a strengthening US Dollar, with the DXY index holding above 107 this month. Additionally, minutes from the early December 2025 Federal Reserve meeting suggested ongoing restrictive monetary policy, which tends to diminish the appeal of non-yielding assets like silver. These elements create a tough environment for precious metals.

Industrial Demand and Market Implications

Industrial demand, which is a crucial factor for silver, appears to be weakening as we review the fourth quarter. The latest global manufacturing PMI for November 2025 fell to 49.5, signaling a slight contraction that could lead to reduced silver consumption in electronics and solar sectors. This stands in contrast to the strong demand figures earlier in the year. For traders, this indicates a potential decline toward the $62.00 level, with important support levels around $61.45 and potentially down to $60.00. We should monitor for continued selling to confirm this bearish trend. Options traders may want to consider buying puts or creating bear put spreads to take advantage of this anticipated drop. However, it is important to maintain disciplined risk management. If silver consistently moves and closes above the $64.00 level, it would negate this negative outlook and might require quick adjustments to short positions. This price point is now crucial for bulls and could act as a stop-loss for bearish strategies. Looking at the broader market, the gold/silver ratio has widened to 85:1, up from the 81:1 average seen in the third quarter of 2025. This suggests silver may now be overvalued compared to gold during its recent rise. A correction toward the average ratio seems increasingly likely. Create your live VT Markets account and start trading now.

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