Silver (XAG/USD) fell after two days of gains and traded near $74.30 per troy ounce during European hours on Monday. The daily chart shows price moving within a descending channel, indicating a bearish bias.
The metal remains below the nine-period and 50-period EMAs, which keeps rebounds capped under a falling trend structure. The 14-day RSI is 47.16, just under neutral, pointing to weak directional conviction.
Technical Levels And Trend
Support is near the four-month low of $61.01, set on March 23. If the decline continues, price may test the channel’s lower boundary around $47.10.
Resistance sits at the nine-day EMA near $74.75, then the 50-day EMA at $76.79 and the upper channel boundary around $78.90. A sustained break above this zone would shift bias higher, with targets at the three-month high of $96.62 from March 2 and the all-time high of 121.66 from January 29.
Silver prices can be affected by geopolitical risk, recession concerns, interest rates, and the US Dollar because XAG/USD is dollar-priced. Other factors include demand, mining supply, recycling, industrial use in electronics and solar, and the Gold/Silver ratio.
The silver price remains within a descending channel, suggesting a persistent bearish bias for us to consider. It is trading below its key short and medium-term moving averages, which cap any attempts at a rally. The path of least resistance continues to point lower.
This technical weakness is being reinforced by recent fundamental data. April’s US Consumer Price Index report showed core inflation remains stubborn at 3.1%, reducing the likelihood of near-term interest rate cuts from the Federal Reserve. Consequently, the US Dollar Index has regained strength, climbing back above the 106 level, which typically puts pressure on dollar-denominated assets like silver.
Furthermore, industrial demand appears to be softening, as recent manufacturing PMI data from China came in at 49.8, indicating a slight contraction. This weakens a key argument for silver’s value, which relies heavily on its use in electronics and solar panels. A slowdown in global manufacturing could reduce physical demand for the metal.
Positioning And Risk Management
Given this backdrop, we should consider strategies that benefit from a potential test of the four-month low around $61.01. Buying put options or establishing bear call spreads could be effective ways to position for further downside. The next major downside target would be the lower boundary of the descending channel, near $47.10.
However, the 14-day Relative Strength Index near 47 shows a lack of strong momentum, suggesting we should not expect a sudden price collapse. This indicates the downward drift may be gradual, allowing for careful entry into bearish positions. We should avoid chasing the price on down days.
Our primary risk is a breakout above the channel’s upper boundary around $78.90. A sustained move past this level would invalidate the bearish outlook and likely trigger a sharp rally towards the March high of $96.62. We must use this $78.90 area as a clear level to reconsider or exit short-side trades.
We should not forget the volatility seen in late 2025 when unexpected geopolitical events caused sharp price spikes in precious metals. Because of this, maintaining a small, long position through far out-of-the-money call options could act as a cheap hedge against a sudden market reversal. This protects us from an unexpected event that could quickly change the current trend.
