Silver has fallen sharply from near record highs of $86.00 to below $75.00. This drop follows US President Trump’s statements, alongside Ukrainian President Volodymyr Zelenskyy, suggesting that peace in Ukraine is closer, affecting precious metal prices.
Silver’s decline below $75.00 is also influenced by heightened hopes for a peace agreement in Ukraine. However, tensions between China and Taiwan, including military exercises and Chinese vessels near Taiwan, could affect the metal’s market trends.
On the technical front, XAG/USD is trading at $74.92 on a 4-hour chart. It approaches the 21-period Simple Moving Average (SMA) at $74.00, providing support. The Relative Strength Index (RSI) is near neutral at 54.79, while the MACD is turning lower, indicating reduced momentum.
Support levels below the SMA include $72.60 and the range between $69.60 and $70.20. Upside resistance is seen at $80.00, and the all-time high is $85.87. This analysis was aided by an AI tool and the article was updated to correct the spelling of President Volodymyr Zelenskyy.
The sharp drop in silver from its recent all-time high near $86 to below $75 presents a complex environment for us. Hopes for a Ukraine peace deal are driving prices down, but we must balance this against the new geopolitical risk from China and Taiwan. This situation creates a clear conflict between potential de-escalation in Europe and rising tensions in Asia.
For those anticipating further declines, buying put options with strike prices near the $72.60 support level is a direct way to trade this move. This bearish view is supported by the latest Commitment of Traders report, which showed large speculators trimming their net-long silver positions by nearly 15% last week. It suggests that institutional money is becoming cautious after the recent run-up to record highs.
However, the escalating military exercises around Taiwan should not be underestimated, as they could easily reverse silver’s downtrend. Reports indicate that maritime insurance premiums for cargo transiting the Taiwan Strait have already jumped by over 25%, signaling a real and priced-in market risk. This makes buying call options a plausible counter-trade for those betting that Asia’s geopolitical risk will outweigh Europe’s peace dividend.
Given these two powerful but opposing narratives, we are seeing elevated implied volatility in silver options, making strategies like long straddles attractive. This approach allows us to profit from a significant price move in either direction without having to perfectly predict the outcome. Looking back at the market reactions to the initial conflict in 2022, we recall that volatility was the only constant as geopolitical headlines shifted rapidly.
For those of us already holding long silver positions, purchasing puts can serve as a prudent hedge against a drop towards the strong support zone around $70.00. The key technical level to watch in the immediate future is the 21-period moving average near $74.00. A decisive break below this could signal that the bearish momentum from the peace talks is overpowering the bullish pressure from the Taiwan situation.
