Silver prices have recently climbed above $100.00, reaching a peak of $100.39, before falling slightly. The grey metal has seen a daily gain of over 4% after bouncing back from a low of $96.04. Even with reducing geopolitical tensions, the US Dollar has weakened, affecting silver prices. Discussions involving Russia, Ukraine, and the US have started in Abu Dhabi to address ongoing conflicts.

Strong Momentum Indicators

The Relative Strength Index (RSI) suggests that momentum is still strong, hinting at potential further gains. If silver prices drop below $96.00, it could lead to a correction down to $86.23. Several factors influence silver prices, including geopolitical issues, industrial demand, and the strength of the US Dollar. Silver is notably used in electronics and solar energy, with rising demand possibly boosting its value. Silver prices usually follow the trends of Gold due to their shared safe-haven status. The Gold/Silver ratio can help determine if silver is undervalued or overvalued compared to gold. The information provided discusses risks linked to trading silver and is for informational purposes only. Readers should do their own research before making investment decisions. This article does not provide personalized investment advice.

Impact Of US Dollar Weakness

With silver breaking the important $100.00 level, the main reason is the ongoing weakness of the US Dollar. The US Dollar Index (DXY) has dropped over 8% since the third quarter of 2025 and is currently around 95.50, creating a favorable environment for dollar-denominated assets. Given this macro situation, we should be careful about taking short positions, as the trend is likely upward while the dollar is weak. Now that we are at record highs, we should expect heightened volatility in the weeks ahead. Implied volatility for short-term silver options has already risen above 45%, a level we haven’t seen since early 2025’s market turmoil, making buying options costly. It might be better to sell premium using defined-risk strategies like bear call spreads above the $105 mark or bull put spreads below $95 to profit from this volatility. While the momentum is strong, we should keep an eye on the Gold/Silver ratio for signs of divergence. With gold priced around $3,150, the ratio has fallen to a historically low 31.5, indicating that silver may be overvalued compared to gold. A drop below the crucial $96.00 support level might lead to a quick correction, making a pairs trade of long gold and short silver a smart hedge. We also need to consider the solid fundamental support for silver from industrial demand. Final reports from the Silver Institute in 2025 revealed that global demand from solar panel and electric vehicle manufacturing rose by over 20% year-over-year. This strong industrial demand is not just speculative and could provide a solid price floor during any potential pullbacks. Create your live VT Markets account and start trading now.

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