Silver’s price has risen above $87.00 after bouncing back from lows below $72.00, thanks to a better market outlook. XAG/USD is up slightly, trading at $87.05, recovering from a drop of over 30% in recent days.
Market sentiment is improving due to news about a US-India trade deal and upcoming Iran nuclear talks. This boosts demand for riskier investments. XAG/USD faces immediate resistance at $88.00, with possible targets of $100.00 and $104.00 if it breaks through this level.
Technical indicators show some bearish trends; the MACD is below the Signal line, and the RSI is just under 50, even as it moves upwards. Support is near the monthly low of $71.37 and also at the $60.00 zone.
Silver is valued for its role as a store of value, a means of exchange, and for portfolio diversification. Its price is affected by geopolitical issues, movements of the US dollar, interest rates, and investment demand.
Demand from industries, especially in electronics and solar energy, influences prices due to silver’s high electrical conductivity. Silver prices usually follow gold’s trends, and the Gold/Silver ratio helps indicate their relative worth.
Looking back to the extreme market swings in late 2025, silver dropped over 30% before sharply rising towards $87. This volatility teaches us how quickly market sentiment can change, leading to a high-risk environment. The technical signs of weakness at that time, like the RSI below 50, show that price rallies can be unstable.
Such historical swings mean that options market volatility could remain high. For traders, purchasing options, like calls or puts, can be an appealing way to manage risk. Caution is advised when selling premiums with strategies like covered calls or cash-secured puts until a clearer market direction is established.
On the fundamental side, industrial demand has strengthened since last year. Global solar panel installs are estimated to rise by 15% in 2026, significantly increasing silver’s use. This provides solid support for prices, which was less certain during the sell-off in 2025.
Monetary policy also supports silver, with recent comments from the Federal Reserve suggesting a pause in interest rate hikes. This led the U.S. Dollar Index (DXY) to drop from over 105 to around 103.5 in the last month. A weaker dollar makes silver more affordable for foreign buyers and enhances its attractiveness as a non-yielding asset.
Given the resistance noted last year around the $88-$90 range, a bull call spread might be a good strategy for those betting on a higher price. For example, one could buy a March $85 call and sell a March $90 call at the same time. This approach benefits from steady price increases while controlling both risk and reward.
However, caution is necessary due to the potential for another market downturn, reminding us how quickly conditions changed in 2025. The latest Commitment of Traders report indicates that large speculators have reduced their net-long positions, hinting at some profit-taking. Buying puts with a strike price near the old support level of $72 could act as a good hedge against sudden downturns.
The gold-silver ratio is also noteworthy, currently around a historically high 85:1, compared to a long-term average of about 60:1. This indicates that silver may be undervalued relative to gold and could perform better if precious metals gain traction. This justifies considering longer-term bullish positions while still hedging for short-term weaknesses.
here to set up a live account on VT Markets now
