Silver (XAG/USD) fell to about $72.85 in Tuesday’s Asian session, trading below the 100-day EMA and staying under selling pressure. Reports of Iranian attacks on vessels in the Strait of Hormuz lifted crude oil prices and added to inflation concerns.
Higher inflation concerns have increased expectations that the US Federal Reserve may keep rates higher for longer. Minneapolis Fed President Neel Kashkari said on Sunday that more rate rises cannot be ruled out, with energy-driven inflation risks still elevated.
Technical Picture Remains Bearish
On the daily chart, the price remains below the 100-day EMA and the Bollinger Bands 20-day SMA. The 14-day RSI is around 44, pointing to bearish momentum without an oversold reading.
Resistance stands at the 100-day EMA near $74.45, then the Bollinger midline at about $76.00, with the upper band around $80.85. Support is at the May 4 low of $72.20, and a break lower could bring the lower Bollinger Band near $71.15 into view.
Silver prices can be influenced by geopolitics, recession risks, interest rates, and moves in the US Dollar. Industrial demand from electronics and solar, as well as links to gold price moves and the gold/silver ratio, can also affect pricing.
Looking back to this time in 2025, we saw silver prices under significant pressure, trading below $73. The market was worried about Middle East tensions pushing up oil and forcing the Federal Reserve to keep interest rates high. That sentiment, combined with the price falling below the 100-day moving average, created a bearish outlook for the metal.
From 2025 Pressure To 2026 Complexity
Those fears of prolonged high rates last year eventually subsided as inflation cooled towards the end of 2025, leading to a major rally in precious metals. We saw silver rebound sharply from those sub-$75 levels, rewarding traders who were positioned for a Fed policy pivot. The industrial demand story, particularly for solar panels and electric vehicles, provided a strong tailwind throughout the first quarter of 2026.
Now, with silver trading around $85.10, the situation has become more complex and suggests a different strategy is needed. The April 2026 CPI report came in slightly hot at 2.9%, halting expectations of an imminent Fed rate cut and introducing new uncertainty into the market. This has caused implied volatility in silver options to tick up to a three-month high, making option premiums more expensive.
The robust industrial demand remains a key support, with the Silver Institute’s latest report showing photovoltaic demand grew by 14% year-over-year in Q1 2026. However, recent Commitment of Traders data shows that while large speculators are still holding significant net-long positions, the pace of new buying has stalled over the last two weeks. This suggests the powerful rally we experienced may be losing momentum.
Given this backdrop, we should consider strategies that protect recent gains or profit from a potential consolidation period. Buying put options with a strike price around $82.00 could be a cost-effective way to hedge long positions against a sharp pullback in the coming weeks. For those who believe the rally is simply pausing, selling covered calls against existing holdings can generate income from the elevated option premiums.
The Gold-Silver ratio, which fell from over 85:1 last year to a current level of 78:1, indicates silver has been outperforming gold but is now beginning to stabilize. We should watch for any signs of this ratio climbing back above 80:1 as an early warning that capital may be rotating back towards gold’s relative safety. A cautious approach using defined-risk option spreads, such as a bear put spread, could be prudent until the Fed’s direction becomes clearer.
