Silver (XAG/USD) traded near $76.50 at the time of writing, down 0.70% on the day. It began the week on a weaker note after failing to build on a recent rebound. Profit-taking followed a fresh look at US monetary policy after new data.
US inflation slowed in January, according to the Consumer Price Index (CPI). Headline CPI rose 0.2% month-on-month, down from 0.3% previously. The annual rate eased to 2.4% from 2.7%.
Fed Policy And Market Expectations
Markets are also tracking US labour market strength and the Federal Reserve’s view. The Fed has not signaled a near-term rate cut. The CME FedWatch tool suggests no change at the March and April meetings, keeping rates in the 3.50%–3.75% range.
A modest rebound in the US Dollar has pressured dollar-priced metals, since a stronger Dollar makes them more expensive for overseas buyers. Still, the Dollar’s upside may be limited by expectations of policy easing later in the year.
Geopolitical risks remain under the spotlight, including tensions between Washington and Tehran. Reports say the US military is preparing for the possibility of extended operations against Iran if the situation escalates.
Looking back to this time in 2025, silver was trading cautiously around $76.50. Markets were focused on the Fed’s reluctance to cut rates, even as inflation cooled to 2.4%. That backdrop meant traders had reason to be careful with long positions and to favor strategies suited to range-bound or weaker prices.
Shift In The 2026 Outlook
That cautious view proved accurate. The Fed kept rates unchanged through the summer of 2025, pointing to a strong labour market that added more than 220,000 jobs per month through the second quarter. Higher real yields and a firm US Dollar stayed in place, which limited meaningful rallies in silver for months. Derivative traders benefited most from selling call options on rallies or using bearish put spreads.
Conditions have changed as we move into the first quarter of 2026. The strength seen in early 2025 has faded. Recent reports show Q4 2025 GDP growth slowed to 1.3%. The CME FedWatch Tool now shows more than an 85% chance of a rate cut in March 2026, a sharp shift from the hawkish pause a year earlier.
Geopolitical risks from 2025 have also persisted, helping support demand for safe-haven assets. At the same time, industrial demand has picked up. Industry reports estimate photovoltaic demand for silver rose about 15% in 2025. This added support, together with a more dovish Fed, suggests traders may want to consider bullish strategies, such as buying call options or using bull call spreads, to position for potential upside.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
