Silver has reached a record high of $60.75, with bulls now eyeing $61.00, $61.50, and $62.00. However, a bearish RSI divergence hints at a possible loss of momentum and exhaustion in upward movement. On Tuesday, Silver’s price rose over 4% and broke its previous high of $60.57, totaling a remarkable 110% increase for the year. Currently, XAG/USD is trading at $60.65 after hitting $60.75. Technical analysis shows the potential for more gains, with $61.00 acting as the next resistance point. Still, the negative divergence suggests that Silver’s upward trend may be in trouble, as the RSI didn’t match the peak price. If Silver surpasses $61.00, it may face resistance at $61.50 and $62.00. On the other hand, if it drops below $60, we could see a correction toward $56.49, where there is major support at around $54.46. Silver prices are influenced by various factors, like geopolitical tensions and interest rates. While silver is not as popular as gold, it’s still valuable because of its industrial uses and its historical role as a store of value. Global industrial demand, especially from the electronics and solar sectors, significantly affects Silver’s price movements. Although silver has reached a new height of $60.75, we need to be cautious about the immediate bullish momentum. The bearish RSI divergence serves as a key warning that this upward trend might be losing strength, even with new price highs. Therefore, traders should be careful rather than aggressively seeking new long positions. This warning is also backed by a shaky outlook for industrial demand. Recent manufacturing PMI data from China, a major industrial silver consumer, dropped to 49.8, indicating a slight contraction as we move into the new year. This decline in demand supports the notion that the rally might be overdone. Additionally, we must take into account the broader economic context. The Federal Reserve has indicated that it will maintain higher interest rates for an extended period. Although US inflation is easing, it still remains above 3%. This situation makes it more expensive to hold a non-yielding asset like silver, which could limit any significant price increases going forward. Examining relative value, the gold-to-silver ratio has tightened to a historically low level of around 41. This suggests that silver may be overpriced compared to gold. Recall that a similar sharp rise in 2011 was followed by a significant price correction, indicating that a reversal might happen soon. In the coming weeks, traders should consider strategies that account for this potential pullback. Buying put options near the $56.49 mark could provide a good risk-to-reward opportunity if the price drops below the crucial $60 support. For those holding long positions, selling call options above the $61.50 level could be a wise move to generate additional income while protecting against a possible downside correction.

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