Silver rebounded from its daily low on Thursday as the US Dollar and Treasury yields pulled back. XAG/USD traded near $71.50, down about 5% after falling to $65.51, its weakest level since February 6. The Fed, BoJ, SNB, BoE, BoC and ECB all left interest rates unchanged. They also noted upside inflation risks linked to higher Oil prices during the US-Israel war with Iran.

Rate Expectations And Silver Demand

Markets are reassessing rate expectations, supporting a higher-for-longer view on borrowing costs. This is weighing on demand for silver, which does not pay interest, even with ongoing geopolitical tensions. On the chart, silver has stayed under downward pressure after peaking near $96.62 earlier this month. Price moved below the 50-day SMA and then fell under the 100-day SMA near $73.40, which is now a pivot level. RSI is around 34, near oversold levels. MACD is below its signal line in negative territory, and ATR has edged higher, pointing to rising volatility. A daily close below the 100-day SMA keeps focus on $64.08, the February 6 low, then $54-$55. If price regains the 100-day SMA, the 50-day SMA may limit gains, with $96.62 and $121.66 as higher levels to watch.

Shift From March 2025 Outlook

Looking back at the analysis from March 2025, the environment for silver was quite negative due to a “higher-for-longer” interest rate narrative. Today, we see a different picture as the market is now pricing in potential Federal Reserve rate cuts later this year, even with recent inflation data like the Consumer Price Index showing a stubborn 3.2% annual rate. This shift in expectation fundamentally alters the landscape for non-yielding assets like silver. The pressure from a strong US Dollar and high Treasury yields, which we saw as a major headwind last year, has softened. The 10-year Treasury yield is currently hovering around 4.3%, down from its peaks, creating a more favorable backdrop for silver prices. As a result, we are no longer testing lows but are instead consolidating around the $25.00 per ounce mark. For traders expecting volatility to pick up ahead of the next Fed meeting, buying protective puts could be a prudent strategy to hedge long futures positions. For instance, purchasing puts with a strike price below the key support level of $24.00 would offer a safety net against any unexpected hawkish signals. This allows for continued upside exposure while defining the downside risk. Conversely, those who believe the path is clearer for rate cuts can consider bullish strategies with defined risk. A bull call spread would allow traders to profit from a moderate rise in silver prices toward the next resistance level near $26.50, without the unlimited risk of a naked long call. Selling cash-secured puts below the current price is another way to express a bullish view, with the goal of either collecting the premium or acquiring silver at a lower cost basis. We’ve also observed a significant shift in market positioning compared to last year’s bearish sentiment. The latest Commitment of Traders report shows that managed money funds have increased their net long positions in silver futures. This indicates growing institutional belief that the price floor is in and the path of least resistance is now to the upside. From a technical standpoint, silver is holding above its 50-day moving average, a stark contrast to the breakdown we were analyzing in March 2025. We are now watching the $25.50 level as a near-term pivot point, with a sustained break above it potentially triggering a move toward the 2023 highs. The key is to watch if buying volume increases on these upward movements, which would confirm the bullish momentum. Create your live VT Markets account and start trading now.

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