Silver (XAG/USD) trades in a constricted range for the third day, maintaining its position below the mid-$36.00s during Tuesday’s Asian session. Remaining near its highest point since February 2012, it seems set to rise further.

The current range-bound activity is viewed as a bullish phase, following a robust rally from April’s low. Daily chart oscillators suggest XAG/USD could move upward, yet resistance may occur around $36.85-$36.90.

Strength past this resistance could extend the uptrend beyond $37.00, approaching the February 2012 high. Should it fall below $36.00, support may be seen around $35.45, with potential declines reaching below $35.00.

Silver has traditionally served as a store of value and medium of exchange. Investors choose it for diversification, intrinsic value, or as a hedge against inflation, purchasing it physically or via trading vehicles like ETFs.

Silver prices are influenced by geopolitical events, interest rates, and the US Dollar. Industrial demand in electronics and solar energy also affects prices, with economic dynamics in the US, China, and India impacting further. Silver prices often mirror Gold’s movements, with the Gold/Silver ratio offering clues on relative valuations.

Given the current price activity in silver (XAG/USD), we are observing a phase of consolidation just beneath multi-year highs. The metal has held steady in a tight trading band for multiple sessions now, pausing just below $36.50. This hesitation follows a sharp move up from its April low, suggesting the market is digesting recent gains and preparing for a potential next leg.

On the daily charts, short-term indicators like the Relative Strength Index and Moving Average Convergence Divergence continue to lean in favour of upward momentum. However, the range between $36.85 and $36.90 remains an obstacle that has not yet been cleared. A decisive push through this ceiling would likely bring $37.00 back into range and potentially challenge the high from February 2012. But should prices fail to build support above $36.00, the drawdown could extend into the low $35.00s, particularly around $35.45, which has acted as a buffer previously.

We should take note that silver is not merely a speculative asset, but one with dual-purpose utility. Beyond its investment appeal, it has real-world use cases in areas like solar technology, automotive electronics, and industrial production lines. That makes it more sensitive to both macroeconomic shifts and trade data from major industrial players such as China and India. When those regions show signs of accelerating or slowing growth, silver tends to react quickly and with conviction.

Movements in the US Dollar and expectations around interest rates have also built into spot silver’s recent performance. If yields remain subdued and the Dollar shows softness, particularly against a backdrop of sticky inflation, metals with store-of-value appeal tend to benefit. This dynamic has helped lift silver close to 12-year highs. But if rate expectations begin to shift — for instance, due to more aggressive central bank signalling — then current price levels could turn vulnerable, especially considering how extended the rally is from its April base.

Traders should also keep a close eye on the Gold/Silver ratio. Recent contraction in this metric typically points to a preference shift towards silver, potentially indicating either stronger industrial demand or short-term speculative interest. Should this ratio revert, it could send signals that the overstretched silver price may need to re-align with its historical relationship to gold.

In terms of action, monitoring volume in these upper bands could offer perspective on whether this current range is accumulation before a breakout, or distribution ahead of a reversal. Beware of false breakouts. If silver fails repeatedly at the $36.90 level and liquidity dries up, it may signal that the buying thrust is losing steam.

As we look forward, the path of least resistance might still be higher, but only if the conditions support a sustained breakout. A sudden change in Dollar direction or a surprise in economic indicators out of Asia could prove decisive either way. Those exposed should continue watching risk-reward setups and avoid overcommitting until either side of the current range gives way with conviction. Limit exposure near resistance and wait until the price shows clear behaviour — either a clean breakout or a pattern of rejection.