Silver (XAG/USD) traded near $87 in Thursday’s European session, after failing to extend its near two-month rise above $90.00 on Wednesday. The move left prices consolidating below the round-number level.
Market pricing shifted after traders reduced expectations of a Federal Reserve rate cut this year. The CME FedWatch tool shows 1% odds of a cut, with 66.8% for no change and 32.2% for a rise.
Us Inflation Repricing
The repricing followed US CPI data on Tuesday showing headline inflation at 3.8% year-on-year in April, up from 3.3%. A month earlier, FedWatch showed no chance of a hike this year.
Attention also turned to potential comments from US President Donald Trump after meeting Chinese leader Xi Jinping. These remarks are being watched for any impact on risk sentiment and metals.
Technically, silver held above the 20-day EMA at $79.66, with the RSI near 68. A break above $90.00 could open the way towards the March 2 high of $96.62, while $79.66 is an initial support level.
We are seeing a setup in silver that may feel familiar to those who remember the market action in 2025. Around this time last year, the silver rally stalled just below $90 as the market began pricing in Federal Reserve rate hikes due to persistent inflation. That hawkish shift ultimately put a cap on the precious metal for several months.
Fed Pivot And Options Ideas
The environment today, on May 14, 2026, is fundamentally different and presents a potential opportunity. Unlike last year, the latest April CPI report showed inflation has cooled to 2.9%, and the CME FedWatch Tool now indicates a greater than 60% probability of at least one rate cut by the end of the third quarter. This dovish pivot from the Fed is creating a tailwind for non-yielding assets like silver.
Given this backdrop, derivative traders could consider positioning for a break above the long-term resistance at $90. Buying call options with strike prices at $92 or $95 could offer leveraged upside if the metal pushes towards its 2025 highs near $96. The shift in interest rate expectations suggests the path of least resistance is now upward.
However, the memory of last year’s failure at these levels should not be ignored, as momentum indicators are once again becoming stretched. Traders should remain cautious and could use put options with a strike price near the 20-day moving average, currently around $81, to hedge long positions. If economic data suddenly reverses and points to higher inflation, the Fed could quickly walk back its dovish stance, causing a sharp pullback.
Strong industrial demand provides a solid floor for silver prices, a factor that was also present last year. Global demand from the solar energy sector continues to accelerate, with the International Energy Agency projecting another record year for installations, which will consume over 150 million ounces of silver. This consistent demand should cushion any significant downturns and support the broader bullish trend.
