Silver prices have dropped slightly to about $98.00 after reaching a recent high of $99.39. This decline occurs while the US Dollar weakens amid ongoing tensions between the EU and the US.

Weakness of the US Dollar

The US Dollar Index is facing one of its weakest weekly performances since June. Geopolitical tensions, particularly involving the US and Greenland, are affecting the dollar’s role as a global reserve currency. Despite these ups and downs, silver shows strong upward momentum, with technical indicators pointing to a continued rise. Silver’s price encounters resistance close to the key level of $100.00 and previously around the 127.2% Fibonacci extension at approximately $99.50. The next goal for buyers is the 161.8% extension at $106.38, with support anticipated at the prior high of $95.90 and further down at the 100-period SMA, now at $92.60. Investors often seek silver for diversification and as protection against inflation. Prices can be influenced by geopolitical events, interest rates, and the strength of the US Dollar. Demand from industries also affects prices, with silver often following gold’s trends due to similar safe-haven qualities. The Gold/Silver ratio is an important measure of their relative value. Remember in 2025 when silver soared close to $99.39, but faced difficulty breaking the crucial $100 level? That rise was fueled by a weakened US Dollar during geopolitical stress. The subsequent decline reminds us of the importance of managing risk near major resistance points. Today, a similar situation appears to be developing. The US Dollar Index has shown weakness after dropping from recent highs of around 107. The current global trade tensions are creating challenges for the dollar, which could benefit precious metals. This environment resembles the conditions leading to the significant rally we observed in early 2025.

Trader Opportunities

For those trading derivatives, this setup presents a chance to prepare for a potential price increase in the coming weeks. Buying call options with strike prices above the current market level allows traders to take advantage of possible gains while controlling maximum risk. Due to historical volatility, options may be a safer choice than holding leveraged futures positions. Strong fundamentals support this outlook, especially regarding industrial demand. Global solar capacity is expected to grow significantly in 2026, with projections of over 500 gigawatts of new installations that will require large amounts of silver. This steady industrial consumption provides a strong price floor that was not as evident in previous cycles. It’s also important to consider silver’s value compared to gold. The gold-to-silver ratio is currently high at nearly 88:1, much above the 21st-century average of around 65:1. Historically, a high ratio often leads to periods where silver outshines gold, indicating it may be undervalued now. Even with these positive signals, the setback at $100 in 2025 is a clear reminder of how quickly market sentiment can shift. Traders should monitor key technical levels closely, using the previous support zone around $90-$92 from January 2025 as a reference point for risk. A strategy could involve gradually building positions rather than investing everything at once. Create your live VT Markets account and start trading now.

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