Silver prices fell by 2.75%, settling at $61.84 after reaching a record high of $64.65. A bearish engulfing pattern and negative RSI divergence hint at a possible decline in the near future. Key support levels are $61.00, $60.09, and $59.33, while resistance stands at $62.00.

Short Term Retracement

Although silver still has a positive outlook overall, it may experience a short-term pullback. The market indicates more sellers than buyers, and the RSI shows a risk of further drops. If silver falls below $61.00, it could drop to $60.09 and then to $59.33. If it rises above $62.00, resistance may appear at $64.30 and $64.65. Silver is often viewed as a safe-haven investment and a means of payment. Investors use it to diversify their portfolios and protect against inflation. Price movements are affected by factors like geopolitical issues, interest rates, and the performance of the US Dollar. Industrial demand, especially from the electronics and solar industries, also plays a significant role, with changes in demand from the US, China, and India influencing prices. Silver tends to follow gold trends due to its safe-haven status. The Gold/Silver ratio is used to compare the value of both metals, indicating that silver might be undervalued when the ratio is high. As silver experiences a sharp decline after reaching $64.65, caution is needed in the short term. The bearish engulfing pattern on charts shows that sellers are currently in control. This profit-taking before the weekend suggests a potential further decline next week.

Market Reaction To Economic Data

New economic data is affecting the market, complicating the Federal Reserve’s decisions. The Consumer Price Index report for November 2025 was slightly higher than expected at 3.4%, raising worries about delays in interest rate cuts. This situation has resulted in a stronger US Dollar, which puts pressure on metal prices. For traders dealing in derivatives, this increase in volatility presents an opportunity. Given the risk of a drop toward the $60.00 level, buying put options could be a smart short-term strategy or a way to hedge existing long positions. Selling call credit spreads above $65.00 would also be beneficial if prices remain stable or decrease, leveraging the higher option premiums. We have seen this kind of pattern in precious metals before. In April 2011, silver experienced a rapid rise followed by a swift decline of over 30% within weeks. This serves as a reminder that significant price increases can lead to severe pullbacks. Despite the current situation, the long-term outlook for silver is strong, driven by industrial demand. According to the latest Q4 2025 report from the International Energy Agency, global solar panel installations are set to grow by 22% year-over-year, leading to increased silver use. This demand argues against a sustained price collapse. Therefore, this decrease might be a buying chance for long-term investors. We will closely monitor the support area around $59.33, which was a prior resistance level earlier in December 2025. If prices stabilize there, it could indicate the end of the pullback and a good opportunity to take new long positions using futures or call options. The gold-to-silver ratio is also higher now, moving up to 68 from a low of 65 during silver’s peak pricing. A continuous rise in this ratio suggests that silver is lagging behind gold in the short term. We will keep an eye on this relationship to see if silver’s current weakness is isolated or part of a broader trend in precious metals. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now