Silver (XAG/USD) is experiencing a downturn for the second day, pulling back from a multi-year peak of $37.32 due to profit-taking after the Federal Reserve chose to pause rate hikes. The Fed’s decision to hold rates steady, while indicating that borrowing costs might remain elevated, provided some support to the US Dollar, impacting precious metals slightly.

As of now, Silver is trading down approximately 1.10% at around $36.35. This decline follows a strong rally driven by supply constraints, safe-haven demand, and a weaker US Dollar, with geopolitical tensions between Israel and Iran prompting steady interest in Silver and Gold as safe assets.

Silver benefits from robust industrial demand, particularly in solar panels and electric vehicles, maintaining a global market deficit for five years. Reports indicate a projected supply shortfall of over 110 million ounces by 2025, supporting prices.

Technically, Silver’s trend remains bullish; however, momentum is waning. A bearish divergence is spotted on the daily chart between price and the RSI, suggesting possible short-term correction. Support is seen around $35.30–$35.50, with potential deeper pullback toward $34.50. A rally above $36.50 might trigger a retest of $37.30, possibly pushing towards $38.00.

While silver has enjoyed a remarkable push to the upside in recent weeks, partly buoyed by persistent structural shortages and the broader search for defensive assets, its current pullback invites a more measured posture. Following the retreat from $37.32, which marked levels last seen over a decade ago, the recent Fed pause has shifted attention back to real rates and the strength of the greenback. With Powell underscoring a cautious approach to future cuts, stabilisation in yields gave the US Dollar the room to breathe, nudging precious metals lower across the board.

Now trading near $36.35, this 1.10% dip isn’t particularly steep in isolation, but the daily chart is beginning to whisper—if not yet shout—that momentum is cooling. The divergence between price movement and the RSI is not something we’d overlook. It’s not rare for divergences to precede corrections rather than reversals, though we should not treat this as automatic. Instead, it suggests the current strength in silver may be temporarily stretched. Any further weakness through the $35.30–$35.50 region would open the door to a decline toward the mid-April cluster around $34.50. That zone, incidentally, saw reasonable two-way interest during the last build-up and could serve as a floor, depending on intraday positioning.

We also can’t ignore the medium-term fundamentals, which remain constructive. There is enduring demand supported by industrial scale uptake—solar panels, for instance, have shown few signs of cooling. That said, traders should weigh near-term activity with a sober lens, not least because speculative positioning has grown elevated by recent standards. The expected deficit, over 110 million ounces by 2025, underscores that longer-term supply won’t quickly shift—but deficits alone don’t dictate daily pricing.

Should silver manage to lift back through $36.50 with momentum returning, the failed breakout from $37.30 becomes the logical next hurdle. The $38.00 handle, which remains untouched for over 11 years, could then come into focus rather quickly, particularly if macro conditions lean supportive—such as renewed geopolitical tensions or a reversion in the dollar.

Until then, caution is well advised near resistance, and trailing stops for existing long bias may serve those sitting on earlier entries. Waiting for confirmation above former highs, rather than trying to anticipate bottoming patterns on intraday noise, would offer better clarity. We are not yet in a topping environment, but neither is this fresh breakout territory. Let technical signals lead where conviction may be sagging.