Silver (XAG/USD) fell about 2% to around $75.00 in Asian trading on Monday, near $75.61 at the time of writing. January US CPI data came in below forecasts, but it did not shift expectations towards near-term Federal Reserve rate cuts.
Traders still expect the Fed to hold rates at 3.50%–3.75% in March and April, according to the CME FedWatch tool. US headline inflation slowed to 2.4% year on year from 2.7% in December, and monthly CPI rose 0.2% versus 0.3% previously and 0.3% expected.
Geopolitical Tensions And Safe Haven Demand
Attention also turned to US–Iran tensions after Reuters reported the US military is preparing for possible weeks-long operations if President Donald Trump orders an attack. Such developments can raise demand for safe-haven assets.
On charts, price remains below the falling 20-day EMA at $84.23, with RSI at 43.47 under 50. A daily close above $84.23 could reduce downside pressure, while moves below it keep momentum weak.
Silver prices can be affected by geopolitics, interest rates, the US Dollar, industrial demand, and supply factors such as mining and recycling. Silver often tracks gold, and the gold/silver ratio is used to compare relative valuation.
Looking back to this time last year, we saw silver prices struggling near $75 despite cooling inflation data. The market was fixated on the Federal Reserve keeping rates steady, which capped any immediate upside for the metal. Geopolitical risks involving Iran were a concern then, but they did not escalate into the sustained conflict some had feared.
How The Macro Backdrop Has Shifted
Since then, the Fed did begin a cautious easing cycle in the latter half of 2025 as the labor market showed signs of softening. Today, the benchmark interest rate sits at 2.75%-3.00%, creating a more favorable environment for non-yielding assets like silver. Inflation has continued to trend down, with the latest January 2026 CPI report showing a YoY figure of 2.1%, which supports the case for further rate adjustments later this year.
Industrial demand remains a powerful driver, significantly strengthening the bullish case for silver in the coming weeks. Recent industry reports from early 2026 show that global demand for silver in photovoltaics is projected to increase by over 170 million ounces this year, while its use in 5G-enabled devices is also accelerating. This robust industrial consumption provides a strong price floor that was less of a focus for traders in early 2025.
Given this backdrop, traders should consider positioning for upward movement. Buying call options with strike prices near the old resistance level of $84 could be an effective strategy to capture potential gains. This allows for participation in a rally driven by both accommodative monetary policy and surging industrial use.
Volatility could be managed by using bull call spreads, which involves buying a call option at a lower strike price and selling one at a higher strike. This approach limits the maximum potential profit but also reduces the initial cost and risk of the trade. It is a prudent way to express a moderately bullish view as silver attempts to break out of the range it has been in.
We should also watch the gold/silver ratio, which currently sits around 82, slightly above its historical average. A reversion toward the mean would imply silver outperforming gold, reinforcing the long-silver trade. Therefore, any dips in price toward the low $80s should be seen as potential entry points for call strategies in the weeks ahead.
