Silver (XAG/USD) is facing a downturn for the second consecutive day, pulling back from a multi-year high of $37.32. This drop is mainly due to profit-taking after the Federal Reserve decided to pause interest rate hikes. The Fed’s choice to keep rates steady, while hinting that borrowing costs could stay high, provided some support for the US Dollar, which slightly impacted precious metals. Currently, Silver is trading down about 1.10%, sitting around $36.35. This decline follows a strong rally fueled by supply constraints, safe-haven demand, and a weaker US Dollar. Geopolitical issues, particularly tensions between Israel and Iran, have kept interest in Silver and Gold as safe investments. Silver has strong industrial demand, especially for solar panels and electric vehicles, contributing to a global market deficit for five years. Reports show a projected supply shortfall of over 110 million ounces by 2025, which supports price stability. Technically, Silver’s trend remains bullish, but momentum is slowing down. A bearish divergence is seen on the daily chart between the price and the RSI, hinting at a possible short-term correction. Support is anticipated around $35.30–$35.50, and a deeper pullback may reach $34.50. If Silver rallies above $36.50, it may retest $37.30 and potentially move towards $38.00. While Silver has seen significant gains recently, partly driven by ongoing shortages and the search for safe assets, the current pullback suggests caution. After retreating from $37.32, which hasn’t been seen in over ten years, the Fed’s pause has shifted focus back to real rates and the strength of the dollar. With Powell emphasizing a careful approach to future cuts, stabilization in yields has allowed the US Dollar to gain strength, nudging precious metals lower. Now trading near $36.35, this 1.10% dip isn’t particularly deep, but the daily chart indicates that momentum may be cooling. The divergence between price movement and the RSI should not be overlooked. While divergences can indicate corrections, they do not guarantee reversals. This suggests that the current strength in Silver may be temporarily overextended. A further dip below the $35.30–$35.50 range could lead to a decline towards the mid-April level around $34.50, which previously saw significant interest and may act as a support level. Medium-term fundamentals remain positive, as there is consistent demand driven by industrial applications—especially with solar panels showing robust growth. However, traders should approach near-term activities cautiously, especially since speculative positioning has recently become elevated. The expected supply deficit of over 110 million ounces by 2025 highlights that long-term supply won’t change quickly, but deficits alone don’t dictate daily prices. If Silver manages to rise above $36.50 with renewed momentum, the previous high of $37.30 will be the next target. The $38.00 mark, not touched in over 11 years, could come into play quickly, especially if macro conditions remain supportive, like renewed geopolitical tensions or a decline in the dollar. Until then, it’s wise to exercise caution near resistance. Using trailing stops for existing long positions may benefit those with earlier entries. Waiting for confirmation above previous highs instead of trying to predict bottoming patterns amid intraday fluctuations will provide clearer insights. We are not in a topping environment, but it’s also not a time for fresh breakouts. Let technical signals guide decisions in this uncertain landscape.

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