Silver (XAG/USD) rose more than 6% on Wednesday, climbing above $77.00 after falling to $68.28 on Tuesday. The move followed the unwinding of US Dollar long positions and a rise in risk appetite after a two-week ceasefire in Iran was announced.
A last-minute agreement between the US and Iran set a two-week pause in hostilities and aimed to allow safe passage of oil, gas, fertilisers, and other goods through the Strait of Hormuz. Oil prices and the US Dollar fell, while precious metals rose alongside risk-sensitive assets.
Technical Picture And Momentum
XAG/USD traded near $77.40, staying within an ascending channel that began from lows around $61 in late March. On the 4-hour chart, the RSI moved towards 68 and the MACD turned positive.
Resistance is seen at $78.90, the 50% Fibonacci retracement of the early March sell-off, and near $80.00. Higher up, the channel top aligns with the 61.8% Fibonacci retracement at $83.20.
Support is expected near $75.00, around the 38.2% Fibonacci retracement, then near the channel floor at $72.60. The next lower reference is Tuesday’s low near $68.00.
We saw this playbook last year in 2025, when the temporary ceasefire with Iran caused a massive unwind of US Dollar strength and sent silver soaring above $77. That past event highlights how sensitive silver is to geopolitical relief and a softer dollar. Derivative traders should be watching for any signs of de-escalation in the current Middle East tensions, as a similar, rapid move could happen again.
The current environment is different, with the dollar remaining firm due to sticky inflation data, as the March 2026 Consumer Price Index just came in at 3.4%. This has kept the Federal Reserve from signaling any rate cuts, supporting the greenback and capping precious metals for now. However, this creates a coiled spring scenario, where any dovish pivot or geopolitical calm could remove that pressure very quickly.
Physical Demand And Positioning
Beneath the macro noise, the physical demand story for silver remains incredibly strong, providing a solid floor under the market. The Silver Institute just recently projected another significant supply deficit for 2026, marking the fourth consecutive year. This is largely driven by record demand for solar panel manufacturing, which continues to accelerate faster than mine output can keep up.
Looking at current positioning, data from the CFTC shows that managed money net-long positions in silver futures have climbed to a six-month high, suggesting speculators are already placing bets on a breakout. Implied volatility in silver options has also crept up, reflecting the market’s anticipation of a significant price move. This makes strategies like buying long-dated call options an attractive way to position for upside while defining risk.
Therefore, the prudent move is to prepare for a repeat of the 2025 price action by using derivatives to gain bullish exposure. Consider establishing positions that would profit from a sharp rally towards those old resistance targets near $80.00 and $83.20. Should geopolitical headlines soften or Fed policy shift, the rush out of the dollar and into silver could be just as abrupt as it was before.
