Silver (XAG/USD) dropped about 2% to around $75.00 in Asian trading on Monday, and was near $75.61 at the time of writing. January US CPI came in below forecasts, but it did not change expectations for near-term Federal Reserve rate cuts.
Traders still expect the Fed to keep rates at 3.50%–3.75% in March and April, according to the CME FedWatch tool. US headline inflation slowed to 2.4% year on year from 2.7% in December. Monthly CPI rose 0.2%, down from 0.3% previously and below the 0.3% forecast.
Geopolitical Tensions And Safe Haven Demand
Focus also shifted to US–Iran tensions after Reuters reported the US military is preparing for possible operations lasting weeks if President Donald Trump orders an attack. These headlines can increase demand for safe-haven assets.
On the charts, price is still below the falling 20-day EMA at $84.23, and RSI is at 43.47 (below 50). A daily close above $84.23 could ease downside pressure. If price stays below it, momentum remains weak.
Silver prices can be influenced by geopolitics, interest rates, the US Dollar, industrial demand, and supply factors such as mining and recycling. Silver often moves with gold, and the gold/silver ratio is used to gauge relative value.
At this time last year, silver was also struggling near $75 even as inflation cooled. Markets were focused on the Fed holding rates steady, which limited near-term upside. Iran-related risks were on investors’ radar, but they did not turn into the long-lasting conflict some feared.
How The Macro Backdrop Has Shifted
Since then, the Fed started a gradual easing cycle in the second half of 2025 as the labor market softened. Today, the benchmark rate is 2.75%–3.00%, which is generally more supportive for non-yielding assets like silver. Inflation has continued to ease, with the latest January 2026 CPI showing 2.1% YoY, supporting the case for additional rate cuts later this year.
Industrial demand is still a major driver and is adding to the bullish case for silver in the weeks ahead. Early-2026 industry reports project global silver demand from photovoltaics will rise by more than 170 million ounces this year, while use in 5G-enabled devices is also growing. This strong industrial demand helps create a firmer price floor than traders focused on in early 2025.
With this backdrop, traders may want to prepare for a move higher. Buying call options with strike prices near the prior resistance around $84 could be one way to target potential upside. This offers exposure to a rally supported by easier policy and stronger industrial demand.
Volatility can be managed with bull call spreads. This means buying a call at a lower strike and selling a call at a higher strike. It caps the maximum profit, but it also reduces the upfront cost and lowers risk. It can fit a moderately bullish view as silver tries to break out of its recent range.
The gold/silver ratio is also worth watching. It currently sits near 82, slightly above its long-term average. If it moves back toward the average, silver would likely outperform gold, which supports a long-silver view. For that reason, dips toward the low $80s may offer potential entry points for call strategies in the weeks ahead.
Create your live VT Markets account and start trading now.
here to set up a live account on VT Markets now
