Technical And Momentum Setup
The Relative Strength Index shows sellers still lead, though it is moving up towards neutral. A move above neutral could support further gains. A recovery would need a break above $70.00, then $73.66. Further resistance levels are $77.98 and the 20-day SMA at $78.63. A renewed fall would require a drop below $66.73. That could open a move towards the week’s low of $61.02. Silver prices are affected by geopolitical risk, recession fears, interest rates, and the US Dollar, since it is priced in dollars. They also depend on demand, mining supply, and recycling.Macro And Positioning Drivers
Industrial use in electronics and solar can lift demand, while weaker activity can lower it. Silver often tracks gold, and the gold/silver ratio is used to compare relative value. We are seeing silver prices find support near the $70.00 mark after recent weakness, even as geopolitical tensions initially drove capital to the US Dollar. This quick rebound suggests underlying buying interest is present. Traders should note that while the dollar was the first choice for safety, attention is now shifting back to precious metals. The Federal Reserve’s recent commentary suggests it remains data-dependent, creating uncertainty around the timing of future rate adjustments. With the latest February 2026 CPI report showing inflation remains persistent at 3.4%, the case for silver as an inflation hedge is strengthening. This environment makes long-dated call options an interesting play for traders betting that sticky inflation will eventually force the Fed to tolerate higher metal prices. Industrial demand provides a solid price floor for silver, which we cannot ignore. China’s Caixin Manufacturing PMI recently beat expectations for February 2026, rising to 51.2 and signaling an expansion in factory activity. As silver is a key component in solar panels and electronics, this strong industrial pulse supports prices independently of investment flows. On the other hand, a clear break below the March 26 low of $66.73 would signal a continuation of the bearish trend. In that scenario, we would expect a swift move toward the $61.00 level. Traders could look at buying put options with a strike price below $66.00 to capitalize on such a move, especially given the sharp price drops we witnessed after similar technical breakdowns in late 2025. For a bullish case to gain traction, silver must decisively clear the 100-day SMA at $73.66. A sustained move above this level would likely attract momentum traders and could propel the price toward resistance near $78.00. We believe using bull call spreads would be a cost-effective strategy to position for this potential upside while managing risk. The Gold/Silver ratio is also a key factor, currently sitting at a historically high level of 88, far above the 21st-century average. This indicates silver is significantly undervalued compared to gold. We could see a rotation of funds from gold into silver as traders play this ratio, providing an additional tailwind for prices in the coming weeks. Create your live VT Markets account and start trading now.
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