Drivers Behind The Silver Bounce
Rising Oil prices linked to supply disruption through the Strait of Hormuz added to global inflation worries. This has reduced expectations for Federal Reserve rate cuts, which can weigh on a non-yielding asset such as Silver. Technically, Silver is consolidating after pulling back from the upper Bollinger Band earlier in the week. Price action is trying to hold near the middle Bollinger Band around $83, which also matches the 20-day Simple Moving Average. The RSI is near 50, while the MACD is flattening close to zero with the MACD line slightly below the signal line. The ADX is near 18, pointing to weaker trend strength and a range-bound market. A break below the middle Bollinger Band could bring $72 into view, then $64.08. A move above $93.86 could target $100 and then $121.66.Strategy And Risk Considerations
We are seeing silver caught between conflicting signals, with the softer-than-expected jobs report providing a temporary lift. The latest US Nonfarm Payrolls showed headline strength but contained significant downward revisions for prior months, a pattern of uncertainty we also saw throughout early 2024. This economic ambiguity supports a range-bound environment for now. However, the major headwind remains inflation, driven by rising oil prices from supply disruptions in the Strait of Hormuz. With core inflation still stubbornly holding above the 3% level we struggled with in 2025, the market is reducing bets on Federal Reserve rate cuts. The CME FedWatch tool now shows a diminished probability for a rate cut in the next two meetings, which caps the upside for non-yielding silver. The technical indicators confirm this lack of direction, pointing to consolidation between the key support around $72 and resistance near $94. The low reading on the Average Directional Index (ADX) suggests this sideways trading action is likely to persist in the immediate future. This environment makes selling volatility an attractive option for generating income. Given this outlook, we should consider implementing strategies like an iron condor for the coming weeks, selling out-of-the-money call options above $95 and put options below $70. This approach profits if silver remains within this defined range, capitalizing on the current market indecision and time decay. On the other hand, the US-Iran conflict is a significant risk that could cause a violent price breakout. We saw silver’s implied volatility spike above 30% during similar geopolitical tensions in 2024, so we must be prepared for a sudden move. Traders anticipating a sharp breakout, but uncertain of the direction, could look to buy long strangles to profit from a surge in volatility. Create your live VT Markets account and start trading now.
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