Silver (XAG) rose 2% to about $75.20 in Wednesday’s European session, after falling to an almost two-week low of $73.10 on Tuesday. The broader view stays bearish as US Treasury yields remain firm on expectations of a Federal Reserve rate rise this year.
The 10-year US yield hit 4.69%, a fresh over-a-year high, while the 30-year yield climbed to 5.2%, the highest level since after the sub-prime crisis. Higher yields tend to reduce demand for non-yielding assets such as silver.
CME FedWatch puts the chance of at least one Fed hike this year at 56.3%, compared with two expected cuts before the Middle East war began. US CPI rose to 3.8% year on year last week, the highest in almost three years, amid higher oil prices.
The US Dollar Index (DXY) reached 99.47, a six-week high, and a stronger dollar can weigh on silver. Markets await the FOMC minutes from the April meeting at 18:00 GMT.
Technically, silver remains below the 20-day EMA near $78.05, with RSI around 46. Price is near an Ascending Triangle boundary at $75.20, with $70.00 possible if $73.10 fails.
Looking back at the situation in 2025, we recall the bearish sentiment surrounding silver when it was trading around $75. The primary drivers were high U.S. Treasury yields, with the 10-year hitting 4.69%, and strong expectations that the Federal Reserve would continue hiking rates. This environment correctly favored bearish positions at the time.
The landscape has changed significantly as we stand here in May 2026. The Federal Reserve completed its tightening cycle in late 2025, and the conversation has now shifted towards the timing of potential rate cuts. Recent data shows the 10-year yield has softened to around 4.4%, and April’s Consumer Price Index (CPI) indicated inflation has cooled to 3.4% year-over-year, down from the 3.8% peak we saw last year.
This pivot in monetary policy outlook is creating a more supportive backdrop for silver. The pressure from rising yields has abated, making non-yielding assets like silver more attractive to hold. Therefore, the bearish strategies that were profitable last year should be reconsidered, as the fundamental drivers have weakened.
However, we must acknowledge that the U.S. Dollar Index remains strong, currently trading near 104.5, which is higher than the levels seen in 2025. A persistently strong dollar can act as a headwind, potentially limiting the upside momentum for silver prices. This suggests that while the outlook is improving, any bullish positions should be entered with caution.
For the coming weeks, derivative traders should consider shifting to a cautiously bullish stance. This could involve buying call options or establishing bull call spreads to capitalize on a potential move higher, while still defining risk. We should watch for silver to build support above $70, a key psychological level it flirted with after the breakdown in 2025.
