Silver (XAG/USD) fell to about $73.70 on Tuesday, down 3.50% on the day. The move came as expectations for near-term Federal Reserve rate cuts stayed limited despite cooler US inflation.
US headline inflation fell to 2.4% year on year in January from 2.7% in December. Core CPI rose 2.5%, in line with forecasts, versus 2.6% previously.
Market Volatility Outlook
Volatility risk was flagged as US markets reopened after an extended weekend. The next key event is the release of FOMC minutes from the January meeting on Wednesday.
At that meeting, the Fed kept rates unchanged at 3.50%–3.75%. Talks between the US and Iran in Geneva were also in focus, with discussion expected on Iran’s nuclear programme.
On the daily chart, XAG/USD traded at $73.68. The 20-day EMA fell to $83.30, while RSI (14) was 42.17 and below the midline.
Price remained below the 20-day EMA, keeping near-term rebounds limited. A daily close above the EMA could ease pressure; otherwise, the near-term bias stayed lower.
Derivative Strategy Considerations
A year ago, we saw silver prices under pressure around $73 as the market was weighing the Federal Reserve’s policy path. At that time in early 2025, interest rates were at 3.50%-3.75% amid expectations of further cuts that never fully materialized. Now, with rates holding firm at 3.75%-4.00% and silver trading closer to $68, the environment for non-yielding assets remains challenging.
The focus on inflation data is as critical now as it was then. The drop in headline inflation to 2.4% back in January 2025 did not trigger the aggressive dovish pivot some traders had hoped for. The most recent data from January 2026, which showed inflation proving sticky at 2.8%, reinforces the Fed’s cautious stance and continues to weigh on silver.
For derivative traders, this suggests that strategies capitalizing on range-bound trading or further weakness could be effective. Selling call options above significant technical resistance near $70 could generate income, as the interest rate environment is likely to cap any strong rallies. Looking back at 2025, we recall that implied volatility on silver options rose ahead of FOMC meetings, a pattern we should expect to see repeat.
The technical picture today mirrors the weakness we observed a year ago. The price is struggling below its 20-day moving average, which is now resistance around $70, confirming that the short-term trend favors sellers. The Relative Strength Index is near 38, which indicates downward momentum has room to run before conditions become oversold.
While the specific US-Iran talks of 2025 are in the past, general geopolitical tension remains a background factor that can cause short, sharp rallies. More fundamentally, strong industrial demand, which set a record in 2025 by consuming over 630 million ounces for solar and electronics, provides a long-term floor under the price. This underlying physical demand is a key risk to consider for anyone holding exclusively short positions.
