Silver (XAG\/USD) dropped nearly 10% on Tuesday and traded near one-week lows. It was around $80.68 at the time of writing, after reversing from Monday\u2019s peak near $96.50.<\/p>\n
A stronger US Dollar and higher US Treasury yields reduced demand for non-yielding assets such as silver. Market attention also remained on the US-Iran conflict and risks to Oil flows through the Strait of Hormuz.<\/p>\n
Higher Oil prices can add to global inflation pressure and may affect the Federal Reserve\u2019s path for easing. Higher interest rates often reduce the appeal of precious metals.<\/p>\n
On the 4-hour chart, silver traded near the lower boundary of a rising wedge pattern. This increased the risk of a downside break.<\/p>\n
The Relative Strength Index fell towards 30, close to oversold territory. The MACD stayed below the signal line in negative territory, with the histogram widening to the downside.<\/p>\n
If price breaks below wedge support, the next level is near $72.32, the February 18 low. Further weakness could target $64.08, the February swing low.<\/p>\n
Resistance levels include the 100-period SMA near $83.20 and the 200-period SMA around $88.80. A move above the 200-period SMA would be needed to improve the upward bias.<\/p>\n
We are seeing a significant breakdown in silver, with the 10% drop pushing it to the brink of a bearish technical formation. The primary drivers are the strong US Dollar and rising Treasury yields, which make holding a non-yielding asset like silver costly. This sharp reversal from the $96 level has caught many off guard.<\/p>\n
Recent data supports this move, as last month’s US inflation report came in slightly hotter than expected at 3.8%, dampening hopes for imminent rate cuts. In fact, the CME FedWatch Tool now shows the market is pricing in only a 15% chance of a rate cut by the May 2026 meeting. This environment of higher rates puts sustained pressure on precious metals.<\/p>\n
For derivative traders, the focus in the coming weeks should be on the rising wedge pattern mentioned. A confirmed break below the current $80 support level would be a strong signal for further downside. This makes buying put options an attractive speculative play to target the next support levels near $72.<\/p>\n
Considering this outlook, we could look at purchasing April or May 2026 puts with strike prices around $75 or $78. This provides a clear way to profit from a continued slide while defining our maximum risk. The elevated volatility also means these options will be sensitive to price movements.<\/p>\n
However, we must also consider the geopolitical situation with the US and Iran. As we observed with the market swings in mid-2025, any escalation could trigger a sudden flight to safety, causing a sharp rally in silver. This underlying tension makes outright short positions risky.<\/p>\n
Given this two-sided risk, a bear call spread might be a more prudent strategy for some. By selling a call option and simultaneously buying a higher-strike call for protection, traders can collect premium if silver trades sideways or continues to fall. This strategy benefits from both price decay and the currently high implied volatility.<\/p>\n
Industrial demand is another factor, with recent reports showing a slight contraction in China\u2019s latest manufacturing PMI. A slowdown in industrial activity would reduce a key source of silver consumption. This reinforces the bearish case, as over half of silver demand comes from industrial applications like solar panels and electronics.<\/p>\n
On the other hand, the Relative Strength Index is approaching oversold territory, which could signal this sell-off is becoming overextended. A trader anticipating a short-term bounce from the wedge support could consider a bull put spread. This would involve selling a put option below the current price and buying a further out-of-the-money put to limit risk, profiting if silver stays above the short strike price.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Silver plunged nearly 10% as dollar and yields surged; technicals signal downside risk amid geopolitical tensions.<\/p>\n","protected":false},"author":103,"featured_media":16974,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50647","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50647","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50647"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50647\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/16974"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50647"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50647"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50647"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}