Silver prices fell on Thursday, giving back some of the gains achieved on Wednesday when they hit an all-time high. The drop is mainly due to the Relative Strength Index (RSI) being overbought on the daily chart, leading to some profit-taking. However, the overall technical setup still indicates potential for buying at lower price levels. During the Asian trading session, silver was priced around $65.75-$65.70, down more than 1% for the day. Even with this decrease, silver remains near its previous peak. The technical indicators are still favorable for bullish traders. The breakout around $64.00 has created a positive outlook for the short term, supported by a strong base at the 100-hour Simple Moving Average (SMA). The RSI shows neutral-to-bullish conditions on the 1-hour chart, but it looks overbought on the daily chart. The Moving Average Convergence Divergence (MACD) histogram indicates slowing momentum with a dip below zero. Still, the overall market setup is moderately positive, supported by a rising 100-hour SMA, which may encourage buying on dips. Several factors impact silver prices, including geopolitical events, interest rates, and the US Dollar. Demand from industries and the Gold/Silver ratio also contribute to silver’s market behavior. After reaching a new all-time high yesterday, silver pulled back below the $66.00 mark. This is a normal profit-taking move, likely caused by signals from the daily RSI indicating overbought conditions. Traders should see this as the market taking a breather rather than reversing direction after a significant rally. With the current dip to around $65.70, there is an opportunity to sell cash-secured puts with a strike price near the strong support level of $64.00. This strategy allows traders to profit amid increased market volatility while potentially buying silver at a lower price. The uncertainty in the market is partly due to the Federal Reserve’s recent meeting, where they kept rates steady but hinted at a continued restrictive approach into early 2026. For those who remain bullish, this correction is a chance to buy long positions through call options for the upcoming months. The underlying strength of silver is supported by strong industrial demand. The International Energy Agency’s report for the fourth quarter of 2025 showed a 25% year-over-year increase in global solar panel installations, which rely heavily on silver. Additionally, November’s US inflation rate was slightly elevated at 3.5%, strengthening silver’s role as a hedge. The Gold/Silver ratio adds more context to this situation, having fallen from over 85:1 for most of 2024 to about 70:1 today. This suggests that silver is outperforming gold. Historical data from past bull markets indicate that this ratio could decrease further, suggesting that silver has more potential to gain on gold and that the uptrend is likely not finished. In terms of market positioning, the latest CFTC Commitment of Traders report confirms our belief regarding institutional profit-taking. Large speculators reduced some of their long positions at the peak but still maintain a net-long exposure close to the highest levels seen this year. This signals that, despite the short-term dip, major players are still set on higher prices in the weeks to come.

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