Silver (XAG/USD) is recovering, trading around $48.70, after a 16% drop from its high of $54.86 this month. The recovery is bolstered by technical buying and a demand zone between $45.00-$46.00, although improved US-China relations limit safe-haven demand.

The US Federal Reserve’s recent cut in interest rates provided some support, but the market saw it as a hawkish move, potentially constraining gains. Technically, resistance is at $49.00-$49.50, aligning with the 21-day SMA, and support is seen at $47.26 and $45.56.

Silver prices are influenced by geopolitical factors and interest rates since it is a yieldless asset. The US Dollar’s strength also affects its price because silver is priced in dollars. Investment demand, mining supply, and recycling rates impact pricing.

Industrial demand for silver, used in electronics and solar energy, significantly affects prices. Economic activity in the US, China, and India also contributes to fluctuations. Silver typically follows gold’s price movements, with the Gold/Silver ratio offering insight into their relative valuation.

We are at a key inflection point for silver after its sharp 16% correction from the all-time high set earlier this month in October 2025. The price has found its footing above the 50-day moving average near $45.50, a critical support level. This bounce now forces us to decide if the larger uptrend is resuming or if this is just a temporary relief rally.

For traders with a bullish bias, the main signal to watch for is a decisive break above the $49.00-$49.50 resistance zone. A sustained move over this area, which includes the 21-day moving average, would suggest the correction is over. This would be a trigger to consider buying call options or building long futures positions, targeting a retest of the recent highs above $54.

Conversely, if the price fails to overcome the $49.50 resistance, it could signal that sellers are regaining control. A subsequent break below the crucial support at $45.50 would be a strong bearish indicator. This could prompt traders to buy put options or initiate short positions, as it would open the door for a deeper decline toward the $43.00 level.

The underlying industrial demand picture continues to offer some support, which may limit the downside. The latest Q3 2025 report from the International Energy Agency noted that global solar panel installations are up 12% year-over-year, and silver is a key component. This steady industrial consumption creates a fundamental floor that could encourage buying during price dips.

The Federal Reserve’s “hawkish cut” on Wednesday adds a layer of complexity, as Chair Powell signaled a pause in further easing. This makes sense given the September 2025 Consumer Price Index (CPI) reading eased to 3.1%, reducing the urgency for more rate cuts. For silver, this means the tailwind from falling interest rates may be weakening, potentially capping its upside for now.

We are also watching the Gold/Silver ratio, which offers a clue about relative value. After peaking near 90:1 earlier in 2025, the ratio has now fallen to around 75:1 with silver’s recent outperformance. Since this is still above the 10-year historical average of approximately 70:1, it suggests silver is not yet historically overvalued compared to gold.