Silver fell by 7.90% on Friday, with XAG/USD trading at $76.88 after hitting $83.87. Over the last two sessions, it slid nearly 12% after failing to hold below $90.00 and dropping under $77.00.
The Relative Strength Index turned bearish a day earlier, pointing to stronger selling pressure. The next key level is $75.00, and a break below it targets $72.21, then $70.86, and then $70.00.
A rebound would require a move back above $77.00 and the 50-day Simple Moving Average at $76.98. Further resistance levels sit at the 20-day SMA at $77.79 and the 100-day SMA at $80.94.
Silver pricing can be influenced by interest rates, US dollar moves, recession fears, and geopolitical risk. Other drivers include demand for bars, coins, and exchange traded funds, plus mining supply and recycling.
Industrial use in electronics and solar energy can also affect price, alongside economic conditions in the US, China, and India. Silver often tracks gold, and the Gold/Silver ratio measures how many ounces of silver equal one ounce of gold.
Given the sharp rejection from the $90 level and the subsequent crash, we see that sellers are now in firm control of the silver market. The momentum has clearly shifted, making the path of least resistance to the downside. Our immediate focus should be on the $75 psychological support level, as a break below this could trigger further aggressive selling.
This move is not happening in a vacuum; it is being driven by powerful macroeconomic forces. We have seen the 10-year US Treasury yield spike to 4.75% in the last week, a direct reaction to the latest April CPI report which showed inflation at 3.9%, well above expectations. This data fuels the narrative of a second inflation wave and potential central bank rate hikes, which is historically negative for non-yielding assets like silver.
For traders, this signals an opportunity to position for further weakness. We should consider buying put options with strike prices at or below the $75 mark to capitalize on the downward trend. Given that implied volatility has likely increased after a 12% drop, selling out-of-the-money call spreads could also be an effective strategy to collect premium while maintaining a bearish bias.
This price action is reminiscent of what we observed in late 2025 when similar fears of tightening monetary policy led to a rapid 15% correction in the metal. That period showed us that when bond yields rise this sharply, silver struggles significantly. We should respect this historical pattern and avoid trying to catch a falling knife.
The Gold/Silver ratio has also widened dramatically, now trading above 95 for the first time in nearly two years. This indicates silver’s acute vulnerability, likely tied to concerns that higher rates will curb the industrial demand that is so crucial for its value. This weakness relative to gold presents a clear signal that silver is the preferred short in the precious metals complex right now.
Our risk is defined by a reclaim of the $77 level, which aligns with the 50-day moving average. A sustained move back above this price would suggest the sell-off was overdone, forcing us to reassess our bearish positions. Until then, any bounce toward this resistance area should be viewed as a chance to add to short exposure.
