Silver is in a strong uptrend, currently trading just under the mid-$58.00s. After breaking through the $54.40-$54.50 barrier last week, the market shows little selling pressure, leading many to expect further gains.

Short-term Pullback Consideration

The Relative Strength Index (RSI) indicates a potential short-term pullback. However, such dips are viewed as good buying opportunities, with support around $57.65-$57.60. If prices fall below this level, we might see technical selling that could drop silver down to $57.00 or the recent low of $56.60-$56.55. With an eye on breaking the $58.85 level, bulls in the XAG/USD market may target $60.00. Silver prices are influenced by various factors, including geopolitical events, interest rates, and the value of the US Dollar, as silver is priced in USD. Industrial demand, particularly from the electronics and solar sectors, alongside retail demand from major markets like China, the US, and India, also affects prices. Silver typically follows gold’s price movements, as both are considered safe-haven assets. The Gold/Silver ratio helps investors evaluate the relative value of the two metals, indicating whether one might be over- or under-valued. Currently, silver prices are consolidating below the mid-$58.00s, which we see as a short break in a strong upward trend. The recent rise above $54.50 has created a new, higher trading range. For traders, this stable period is a chance to prepare for the next move, especially as the RSI cools from being overbought.

Trading Strategies for a Bullish Outlook

We should think about strategies that take advantage of a possible ongoing bull run, like buying call options with strike prices at or over the $60.00 mark. The fundamentals support this; industrial demand remains strong, and global solar panel installations are expected to soar past 500 gigawatts by 2025, a 20% increase from 2024, boosting silver consumption. Additionally, the latest US CPI data for October 2025 was slightly higher than expected at 3.8%, strengthening silver’s role as an inflation hedge. For those who expect a minor pullback before the next rise, selling cash-secured puts or bull put spreads with strike prices near the $57.00 support level could be effective. This strategy allows us to collect premium while waiting for a better entry point. The US Dollar Index (DXY) has recently dropped from its November peak of 107 to around 105.5, which supports metal prices since a weaker dollar is generally beneficial. However, we should be cautious of increased volatility at these high price levels, which drives up option premiums. It’s wise to use risk-defined strategies like spreads to guard against sudden reversals like the one seen after the 2011 peak. Last week’s Fed minutes suggested a pause in rate hikes but indicated that cuts are not imminent, meaning the interest rate landscape may remain a challenge for a while. The Gold/Silver ratio is another important indicator. It has decreased from over 80 earlier in 2025 to about 65 now, illustrating silver’s outperformance against gold. Despite this, the ratio is still above its long-term average, indicating silver could still be undervalued and has the potential to rise further, supporting a bullish outlook in the coming weeks. Create your live VT Markets account and start trading now.

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