Silver has eased from record highs after reaching a peak near $54.86. On Friday, XAG/USD dropped over 1.8% to approximately $53.20, as traders took partial profits amid volatile price actions.

Despite this, a combination of safe-haven demand and a physical squeeze in the London market suggests that downside risks are limited. The uptrend remains intact, supported by a series of higher highs and lows on the 4-hour chart. The $53.00 level, aligned with the 21-period SMA at $52.93, is a key psychological support. If the price falls below this mark, it might trigger further declines towards the $51.00-$51.20 zone.

Momentum indicators show signs of fatigue. The RSI has eased to around 56, indicating waning momentum, while the MACD shows a bearish crossover. This suggests a potential slowdown before resuming the uptrend. The ADX remains strong, signalling a prevailing uptrend.

A break above $54.86 would confirm the bullish outlook, with next targets at $55.50 and $56.00. Silver prices are influenced by various factors, including geopolitical tensions, interest rates, USD strength, and industrial demand from sectors like electronics and solar energy. Silver usually follows Gold’s price movements, with the Gold/Silver ratio offering insights into their relative valuations.

We are seeing silver pull back from its all-time high of nearly $54.86, which is typical profit-taking after such a strong run. For now, the price is holding above the critical $53.00 support level, suggesting the underlying uptrend is still intact. This short-term pause, signaled by the RSI and MACD indicators, could present new opportunities.

Given this dip, we see this as a potential entry point for bullish strategies that look beyond the immediate choppiness. Buying call options with expirations in December 2025 or January 2026 allows us to capitalize on a potential resumption of the uptrend toward new highs. Alternatively, selling cash-secured puts with a strike price near the stronger support zone of $51.00 could be a way to collect premium while waiting for a deeper, more attractive entry.

The fundamental case for silver remains strong due to sustained industrial demand. Recent reports from the International Energy Agency show a 22% year-over-year increase in global solar panel installations for the third quarter of 2025, a trend that heavily relies on silver. This robust industrial consumption provides a solid floor for prices, separate from investment-driven demand.

Furthermore, inflation data continues to be a key driver for precious metals. The latest Consumer Price Index report for September 2025 showed headline inflation holding at a stubborn 3.5%, reinforcing silver’s appeal as a hedge. This environment makes it difficult for central banks to justify further monetary tightening, which is supportive for non-yielding assets like silver.

However, the bearish divergence on the momentum indicators should not be ignored. If we see a decisive break below the $53.00 handle, it could trigger a deeper correction. Traders could use put options as a short-term hedge against long positions or to speculate on a move down towards the $51.20 support area.

We have seen similar physical demand pressures before, such as during the market events of early 2021, which led to significant volatility and upward price momentum. The current reports of a physical squeeze in the London market suggest that supply constraints are once again a powerful factor. This historical precedent indicates that any significant dips are likely to be met with strong buying interest.

The choppy price action points to high implied volatility, which can be used to our advantage. For those expecting the price to consolidate in a range for the next few weeks, selling an iron condor with strikes below $51.00 and above $55.00 could be a viable strategy. This approach profits from time decay and a decrease in volatility as the market digests its recent record-breaking move.