Silver (XAG/USD) fell to around $73.70 on Tuesday, down 3.50% on the day. The drop came as traders kept expectations for near-term Federal Reserve rate cuts low, even after softer US inflation data.
US headline inflation eased to 2.4% year on year in January, down from 2.7% in December. Core CPI rose 2.5%, matching forecasts, after 2.6% previously.
Market Volatility Outlook
Volatility risk increased as US markets reopened after a long weekend. The next key event is the release of FOMC minutes from the January meeting on Wednesday.
At that meeting, the Fed left rates unchanged at 3.50%–3.75%. Markets also watched talks between the US and Iran in Geneva, where Iran’s nuclear programme was expected to be discussed.
On the daily chart, XAG/USD traded at $73.68. The 20-day EMA slipped to $83.30, while RSI (14) was 42.17 and below the midpoint.
Price stayed below the 20-day EMA, which continued to limit near-term rebounds. A daily close above the EMA could reduce selling pressure. If not, the near-term bias remains lower.
Derivative Strategy Considerations
A year ago, silver was also under pressure near $73, as markets debated the Fed’s next move. In early 2025, rates sat at 3.50%–3.75%, and traders expected more cuts than actually happened. Now, with rates still firm at 3.75%–4.00% and silver closer to $68, conditions remain tough for non-yielding assets.
Inflation remains the main driver, just as it was then. The drop in headline inflation to 2.4% in January 2025 did not lead to the sharp dovish shift some traders expected. More recent January 2026 data showed inflation staying sticky at 2.8%. That supports the Fed’s cautious approach and continues to pressure silver.
For derivatives traders, this points to strategies that benefit from range trading or further weakness. One approach is selling call options above key technical resistance near $70 to earn premium, since higher rates can limit strong rallies. In 2025, implied volatility in silver options often rose ahead of FOMC meetings, and that pattern may return.
The technical setup also looks similar to last year’s weakness. Price is still struggling below its 20-day moving average, now acting as resistance near $70. That supports a short-term bearish trend. The RSI is near 38, showing downside momentum, with room to fall before the market looks oversold.
While the specific US-Iran talks from 2025 have passed, broader geopolitical risk can still trigger brief, sharp rallies. Over the longer term, strong industrial demand may help support prices. In 2025, industrial use hit a record, with more than 630 million ounces consumed for solar and electronics. This physical demand is an important risk for traders holding only short positions.
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