Silver fell nearly 1% in the North American session on Monday after hitting $78.20. Broad US Dollar strength in thin trade, with US markets closed, pushed it below the 50-day SMA at $79.45.
A bearish engulfing pattern previously drove the price from about $83.70 towards $75.00. Over the last two sessions, XAG/USD stayed within a $75.00–$80.00 band.
Momentum Remains Bearish
The RSI is below its neutral level, pointing to seller control. Price has not broken decisively below $75.00.
A move under $75.00 could open $70.00, then the February 6 swing low at $64.10. On the upside, a break above $80.00 would turn focus to the February 12 high at $84.94 and the February 11 peak at $86.30, ahead of the 20-day SMA at $89.99.
Silver is traded as a precious metal and can be held physically or via products such as ETFs. Prices are influenced by the US Dollar, interest rates, demand, mining supply, recycling, and risk sentiment.
Industrial use in electronics and solar links prices to activity in the US, China, and India. Silver often tracks gold, with the gold/silver ratio used as a valuation gauge.
Market Context And Trade Setup
We are seeing a familiar pattern in silver, reminiscent of the price action from last year. The strong US Dollar, which we saw push the Dollar Index (DXY) toward 104.5 this month, continues to put pressure on the metal. This situation mirrors the struggle we observed in 2025 when a bearish engulfing pattern kept silver stuck in a tight range.
The key level to watch remains $75.00, a floor that sellers failed to break decisively last year. Given that the Relative Strength Index is again showing weak momentum, derivative traders should consider buying put options if the price closes firmly below this support. A break here could quickly lead to a retest of the lower targets from 2025, like the $70.00 mark.
This downward pressure is not just technical, as fundamental factors are also at play. The recent January 2026 Consumer Price Index report came in hotter than expected at 3.3%, which has pushed back market expectations for interest rate cuts. This environment of higher-for-longer rates supports a stronger dollar, making non-yielding assets like silver less attractive.
On the other hand, if buyers manage to push the price back above the $80.00 resistance level, bearish positions should be re-evaluated. A sustained move above this point could signal a shift in sentiment, making call options or bull call spreads a viable strategy. The upside targets would then be the highs we saw around $84.94 in February of 2025.
Industrial demand also appears soft, with the latest global manufacturing PMI figures for January 2026 hovering just below the 50-point mark that separates contraction from expansion. However, we note the Gold/Silver ratio has widened to over 92:1, a level historically indicating that silver is undervalued compared to gold. This could present a long-term opportunity for pairs traders who believe the ratio will revert to its historical mean.
