Silver’s upward trend has slowed down as interest in safe-haven assets drops after a new trade deal between the US and Japan. Trading within a tight range, silver is having a hard time surpassing the $39.40 mark, as it holds onto previous gains but shows signs of exhaustion at $39.15. The trade agreement lowered tariffs on Japanese imports to 15%, improving market sentiment. This has reduced the demand for traditional safe-havens like silver, limiting its rise for the time being. On the technical side, silver’s bullish trend is weakening. This is evident from an overbought RSI and a bearish divergence. Buyers should be careful as the resistance has shifted to support at $39.15, with additional support levels at $38.75 and $38.10. Industrial demand plays a significant role in silver’s value. It’s widely used in electronics and solar panels because of its high conductivity. When demand increases, prices tend to rise; when demand decreases, prices drop. Major economies like the US, China, and India greatly influence silver price fluctuations because of their extensive industrial sectors. Silver prices often follow gold’s movements. When gold goes up, silver usually does too. The Gold/Silver ratio can provide clues about their relative values, indicating whether one metal might be under or overvalued compared to the other. Currently, silver’s price movement has paused as overall market sentiment improves, partly due to statements from the Federal Reserve about keeping interest rates high. This change makes non-yielding safe havens less appealing, which is capping silver’s prices for now. We see this pause as a chance for short-term trading opportunities. Given the signs of technical exhaustion, like an overbought RSI that recently exceeded 70, we are considering short-term bearish strategies. Buying put options with strike prices below the initial support level of $39.15 might be a smart way to take advantage of a potential price drop. If this level is confirmed to break, we could see movement toward the next support zones. However, we must balance this with the strong industrial demand narrative. According to the Silver Institute, global industrial silver demand is expected to grow by 9% to a record 632 million ounces in 2024, driven by significant investments in solar panel production and automotive electronics. This underlying strength should help prevent a sharp price decline and cushion any significant downturns. We are also paying close attention to the relationship between different precious metals for valuable signals. The Gold/Silver ratio is currently around 80:1, much higher than its historical average of about 50:1 during the 20th century. This suggests that silver is relatively cheap compared to gold. For traders looking at a longer time frame, any significant drop driven by short-term sentiment may offer a good entry point for longer-term futures or call options.

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