Silver prices have recently jumped to a record high of $93.52, with many expecting it to exceed $100 soon. The market is optimistic, even though the Relative Strength Index shows the metal may be overbought. If prices climb past $94.00, they could reach $95.00 or even $100. However, if prices fall below $90.00, support levels at $86.91 and $83.75 could come into play. In the US, producer inflation increased by 3% in November, which is higher than expected. Retail sales also showed improvement. At the same time, concerns about the Federal Reserve’s independence have grown, as the Department of Justice has subpoenaed Chair Powell regarding renovation issues. Powell emphasized that his focus remains on monetary policy, regardless of political pressure.

Factors Affecting Silver Price

Silver is a popular choice for diversifying portfolios and its price is influenced by various factors. It often follows gold’s price movements and is affected by geopolitical and economic conditions, interest rates, and industrial demand. Silver is key for electronics and solar energy, so changes in demand from the US, China, and India also play a role. The Gold/Silver ratio helps investors compare the values of these two metals. With silver now above $93, the upward trend is strong, largely due to a weak US Dollar. The market seems to overlook strong US economic data because political pressures are viewed as a bigger threat to the dollar. This political risk is driving market sentiment right now, making traditional economic analysis less reliable. Traders might consider using call options to aim for the psychological $100 level, which appears attainable. Recently, interest in the February $100 call options has surged, indicating where speculative funds are flowing. A safer strategy could be a bull call spread, such as buying the $95 call and selling the $100 call to reduce costs. However, we need to acknowledge the high volatility this rapid increase creates. Implied volatility on silver options has risen to levels we haven’t seen since the market turmoil of mid-2025, making options premiums very pricey for both calls and puts. This indicates a heightened risk for all positions, whether bullish or bearish, due to the potential for sudden market shifts.

Market Historical Context

We remember the dramatic spike in 2011 when prices nearly hit $50 before crashing. Caution is essential, as while the current trend is strong, sharp, unsustainable moves often lead to corrections. It’s crucial to set clear profit targets and stop-loss orders in this market climate. Fundamental support for silver is strengthening. Recent reports from the World Silver Survey forecast a 12% increase in industrial demand by 2026, driven by the EV and solar industries. The Gold/Silver ratio has also significantly narrowed, dropping below 40 for the first time since 2012, which typically signals strong upward momentum for silver. This indicates that the rally may have solid support beyond the current political issues. For those expecting a pullback, a drop below the $90.00 mark would serve as the first serious warning for this rally. Traders might think about buying out-of-the-money put options to hedge long positions or to directly bet on a price reversal. If the price fails to hold yesterday’s low of $86.91, it would suggest that the upward momentum has stalled for now. Create your live VT Markets account and start trading now.

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