The silver price (XAG/USD) dipped to about $47.90 per troy ounce in early trading after reaching a 14-year high of $48.77. The 14-day Relative Strength Index (RSI) is above 70, suggesting a possible price pullback, with initial support at the nine-day Exponential Moving Average (EMA) of $47.00. When the price is above the nine-day EMA, it indicates short-term momentum. However, the high RSI signals the need for caution. The next target for silver could be $48.00, with potential upward movements towards $49.40 and possibly even $50.00.

Potential Downward Trend

If the price falls below the nine-day EMA of $47.00, momentum may weaken, pushing the price down to the lower boundary of the ascending channel at $44.10. A larger decline could put more pressure on silver, potentially leading it to the 50-day EMA at $42.13. Silver prices are influenced by industrial demand, the behavior of the US Dollar, and global economic conditions. Silver serves as both an industrial metal and a safe-haven asset, typically mirroring gold’s price movements. Geopolitical events, interest rates, and industrial demand can all cause fluctuations in silver’s value. After reaching a high of $48.77, silver has rolled back and is now trading around $47.90 as of October 7, 2025. Even though the price is in a bullish ascending channel, it shows signs of being overbought, indicating that a correction might occur before a further upward movement. Traders expecting a bounce toward the psychological $48.00 mark may see it as a near-term opportunity. Buying call options with a strike price of $48.50, expiring in late October, could allow for profit from a potential retest of recent highs. A breakout beyond $48.77 might lead to targeting the upper channel boundary near $49.40.

Strategic Considerations

However, with the 14-day RSI above 70, caution is necessary due to the overbought conditions. To safeguard against a possible decline, purchasing puts with a strike price near the $47.00 support level could provide protection if short-term momentum weakens and prices start to fall. Strong industrial demand continues to support silver, especially after global solar panel installations exceeded 440 GW in 2024, with 2025 numbers expected to surpass this. Increased consumption from this sector strengthens the case for buying during any significant price dips. The overall economic situation also appears positive, as the US Dollar has weakened following the Federal Reserve’s recent indications that interest rate hikes may be over for now. Looking back at the rapid rate increases in 2023 and 2024, this shift to a more dovish stance makes holding non-yielding assets like silver more appealing. A softer dollar typically drives silver prices higher. We are also monitoring the Gold/Silver ratio, which has narrowed from 82:1 earlier this year to 74:1. While this indicates that silver has been performing better than gold, it also suggests that silver may be becoming relatively expensive. This reinforces the possibility of a short-term pullback before the next major price increase. If the nine-day EMA at $47.00 fails to hold as support, it would signal a bearish trend. A drop below this level could lead to a sharper decline toward the lower boundary of the ascending channel near $44.10. In this situation, traders might consider bear put spreads to take advantage of the downward movement. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now