Silver (XAG/USD) fell on Tuesday as a firmer US Dollar and higher US Treasury yields weighed on the metal, amid expectations the Federal Reserve may raise interest rates to address oil-led inflation. XAG/USD traded near $74.76, down more than 3.5%, after an intraday low close to $73.
US-Iran talks stayed stalled over Tehran’s nuclear programme, while the Strait of Hormuz remained largely closed. US President Donald Trump said military action against Iran could restart within the next few days or by early next week if there is no agreement.
Dollar And Yields Pressure Silver
The US Dollar Index (DXY) held near one-month highs around 99.33. The US 10-year Treasury yield rose to a 16-month high near 4.687%, and the US 30-year yield reached about 5.197%, the highest since July 2007.
CME FedWatch shows a near 32% chance of a 25 bps rate rise in October, rising to around 40% for December. Silver sits below the 50-day SMA at $76.60, above the 200-day SMA at $65.40, with the 100-day SMA at $81.28.
RSI was around 45 and MACD moved below zero. Resistance is near $76.60, $81, and $90, while support is at $70, $65.40, and $55.
We recall that back in late 2025, silver was under heavy pressure from a strong dollar and the threat of Federal Reserve rate hikes. The market was watching US 10-year Treasury yields push toward 4.7% and the US Dollar Index hold firm above 99. Those factors created a difficult environment for precious metals.
Macro Backdrop Turns More Supportive
However, the aggressive rate hikes priced in for late 2025 and early 2026 did not occur, as inflation cooled more rapidly than expected in the first quarter of this year. The Federal Reserve has since adopted a more neutral stance, allowing the 10-year yield to fall back to a recent range around 3.9%. This shift has significantly lowered the opportunity cost of holding non-yielding assets.
As a result, the US Dollar Index has broken down from its 2025 highs, now trading closer to 97.25 as geopolitical tensions in the Strait of Hormuz de-escalated. This dollar weakness provides a direct tailwind for silver prices. The fundamental picture has clearly flipped from bearish to supportive in the last six months.
This macroeconomic shift means traders should look for opportunities in bullish positions, as silver has cleared the old resistance we saw near $76 and $81. Options markets now show growing interest in call options with strike prices at the $90 level, a target that seemed remote last year. We believe using bull call spreads is a viable strategy to gain upside exposure while managing premium costs.
The primary risk to this view is any unexpected rebound in inflation that forces the Fed to reverse its tone. Traders should now consider the $81 mark, a former resistance level, as the first key area of support on any pullbacks. The price action around $75, which was a battleground last year, would serve as a more critical floor.
