Silver (XAG/USD) rises on Monday as US Treasury yields fall, with XAG/USD near $70.50, up nearly 1%. A stronger US Dollar is limiting further gains. The 10-year US Treasury yield is down more than 6 basis points to about 4.35% after reaching multi-month highs. Markets had priced in at least two rate cuts before the US-Iran war, while higher Oil prices briefly lifted expectations of rate hikes later in the year.

Federal Reserve Expectations Shift

Those expectations have eased, with the CME FedWatch Tool showing traders increasingly looking for the Fed to keep rates unchanged through 2026. Higher interest rates and elevated energy prices are seen as potential drags on growth, reducing the case for more tightening. Technically, the near-term view is neutral to bearish, with price below the 100-day SMA at $74.96. RSI is near 40 and MACD remains below zero, though it is moving closer to its signal line. Resistance sits at $74.43 (61.8% retracement from $61.01 to $96.15), then $78.58 (50%). Support is around $68, close to $68.53 (78.6%), with further levels at $65 and the 200-day SMA near $58. Looking back at the analysis from 2025, we recall the market trying to find its footing after the US-Iran war re-priced Federal Reserve expectations. The concerns about a strong dollar and sticky interest rates capping silver’s gains have proven accurate, with prices now testing the lower end of that forecasted range. This situation suggests that volatility, which we saw spike last year, is likely to compress in the near term. The Fed has followed through on the path traders began pricing in, holding interest rates steady at 5.25% through the first quarter of 2026. Recent February Consumer Price Index data showed core inflation remains stubborn at 3.6%, giving the central bank no reason to consider cuts. This policy stance reinforces the headwinds for a non-yielding asset like silver, keeping significant rallies in check for now.

Growth Demand And Positioning

The economic slowdown that was a concern in 2025 is now a reality, with the final print for Q4 2025 GDP growth confirmed at a weak 1.3%. While this softness limits silver’s industrial demand component, it also increases its appeal as a potential safe-haven asset if recession fears intensify. This push-and-pull dynamic is why the price has been consolidating rather than breaking down decisively. Given this outlook, we believe selling out-of-the-money call options is a prudent strategy for the coming weeks to generate income. The resistance identified last year around the $74.50 level has held firm, making it an ideal strike price target for selling covered calls against physical holdings. This allows us to profit from time decay as long as silver remains below that key technical ceiling. For those anticipating a breakdown, the support zone near $68 remains the line in the sand. If economic data worsens, a break below this level could accelerate downside momentum toward the psychological $65 handle. We view buying protective puts with a strike price around $66 as a low-cost way to hedge against a sudden drop in sentiment. Create your live VT Markets account and start trading now.

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